Is oil diplomacy driving Venezuelan President Hugo Chavez over the edge? If I compared myself with Jesus, most people would think me a candidate for a straitjacket.
That’s about the only kind of jacket I’m beginning to think the Venezuela president should be trying on these days.
In a speech reminiscent of the Sermon on the Mount, Chavez recently told fellow leaders in the Caribbean that his country would supply them with oil at preferential rates.
“Venezuela puts this oil wealth at the disposition of our peoples of the Caribbean,” Chavez said. “We’re going to share it like Christ....It will be enough for everyone.”
Fish and loaves
Does that remind you of the Sermon’s fish and loaves? Listen on.
“If we truly unite...the grandchildren of our grandchildren will have no energy problems,” Chavez said. He predicted oil prices will soon hit $100/bbl but said, “The Caribbean shouldn’t have problems this century and beyond.”
Gosh, does that mean Venezuelans will be in a position to subsidize the rest of the region?
That’s Chavez’s idea, and it began in 2005 when he set up Petrocaribe, an organization that allows signatory countries to finance up to 50% of their oil bills over 25 years at low interest.
Underscoring Venezuela’s largess, Oil Minister Rafael Ramirez said his country also is making progress by helping upgrade or build refineries in Cuba, Jamaica, and Dominica.
But lest we go too far down the garden path with Chavez and his cohorts, let’s remember just who is helping Venezuela with its own refineries.
A yen for oil
In March, Japan Gasoline, a firm that designs refineries and similar plants, and Venezuela’s Inelectra announced plans to carry out “extended basic engineering” work at Petroleos de Venezuela SA’s Puerto La Cruz refinery.
Construction work for retooling Puerto La Cruz was due to begin in mid-2007 in time for operations in 2010. Once the work is completed, Puerto La Cruz will be able to upgrade crude from 8° to 35° gravity.
Oh, yes! And let’s not forget Venezuela’s other oil deal with Japan-the one signed last February. That’s when Marubeni Corp. and Mitsui & Co. said they had struck a deal with PDVSA to buy crude oil and petroleum products from the Venezuelan state-run company for 15 years.
Under the deal, two financial companies that Marubeni and Mitsui have set up in the Netherlands will borrow $3.5 billion from a banking syndicate consisting of Japan Bank of International Cooperation and commercial banks.
The two firms-Yucpa Finance BV and Caribe Financing Co. BV-will lend the money to the Venezuelan firm, which will repay it by providing crude oil and petroleum products, such as fuel oil, to Marubeni and Mitsui.
Perhaps that’s how Chavez is funding his largess around the Caribbean.
