Editorial | PetroCaribe, but more ...

The Caribbean Community’s (CARICOM) recent call for the United States to end its sanctions against Venezuela so that its members can freely enter energy deals with Caracas was clearly founded in pragmatism. The mostly energy-deficit countries of the region want access to the abundant energy resources of a neighbour that is willing to share on a concessional basis.

While this newspaper fully agrees with the region’s stance, it does not believe that merely insisting on a clear pathway to restarting Caracas’ PetroCaribe oil arrangement is sufficient. CARICOM has not gone far enough to cooperatively address its energy problem.

Put another way, as this we have argued before, a regional energy policy ought to be among the binding features of the CARICOM project, as is becoming increasingly clear as two of its members, Guyana and Suriname, appear headed to becoming significant oil producers and the region contends with the problems of global-warming and climate change. Trinidad and Tobago is already an important exporter of natural gas.

The policy, therefore, can’t focus only on fossil fuels. It ought to encompass how CARICOM develops and shares/allocates its large, but underutilised, capacity in renewables, especially in solar, wind, hydro and geothermal energy.

This issue should urgently be placed on CARICOM’s agenda.

The region’s energy partnership with Venezuela was primarily via PetroCaribe, an arrangement through which a major chunk of Caracas’ oil sales to Caribbean and Central American countries was largely on credit. The outstanding debt was converted to long-term loans and rock-bottom interests, as low as one per cent in some cases. Jamaica was a major beneficiary of the scheme, with its accumulated debt to Venezuela over a decade reaching as high as US$3 billion.

FALTERED UNDER STRAIN

However, PetroCaribe faltered under the strain of Venezuela’s internal political crisis, a near collapse of its economy and harsh sanctions against the administrations of the late Hugo Chávez and his successor, Nicolás Maduro. In Jamaica’s case, those issues were exacerbated by a cooling of its relations with Venezuela over its more than tacit support for Washington’s pressure on Caracas and disagreement over the price of Venezuela’s 49-per-cent holding in the Petrojam oil refinery, which Kingston renationalised.

However, with disruptions in the global energy markets, and hoping for a greater flow of oil, the Biden administration has slightly eased some sanctions on Venezuela. American firms with operations in the country have been allowed to return to limited oil production, and Washington agreed to restrict the application in the country and restrict the application of third-party sanctions against Trinidad and Tobago to allow it to jointly develop with Venezuela offshore gas finds in the vicinity of their maritime border. However, these arrangements preclude the payment of cash to the Venezuelan government.

At their June 8 meeting with the US vice president, Kamala Harris, CARICOM leaders urged the Americans to go further by lifting “sanctions on Venezuela to allow countries in the region to benefit from the PetroCaribe initiative and for progress on the exploitation of cross-border natural gas fields between Trinidad and Tobago and Venezuela”. The Trinidadians had previously asked the Americans to adjust the agreement for the natural gas project, but the specifics of the request haven’t been disclosed.

RENEWED PARTNERSHIP

The Americans, in keeping their declaration of a renewed partnership with the Caribbean after Donald Trump’s presidency, should acquiesce to CARICOM’s reasonable requests. Further, there can be no value to the United States attempting to further pauperise Venezuela, whose hordes of economic migrants is an increasing source of instability in Latin America. Even some CARICOM members, especially Trinidad and Tobago, haven’t escaped the strain.

Additionally, the political aims of the sanctions have obviously failed.

At the same time, Guyana’s emergence as a member of the oil-producers’ club, and promising discoveries in Suriname, have added new dimensions to the region’s energy dynamics. Guyana is already producing 400,000 barrels per day (bpd) of crude from its off-shore wells, more than twice as much as Trinidad and Tobago’s nearly 156,000 bpd at its oil production peak in 2005. Guyana is projected to reach 900,000 bpd in 2025 and 1.2 million bpd in 2027.

From the 1990s and well into the 2000s, Trinidad and Tobago was often accused of using cheap, subsidised energy to fuel its factories, thus accelerating the ‘de-industrialisation’ of its partners in CARICOM – an entity whose aim is to become a full-fledged single market and economy. CARICOM, Jamaica especially, also claimed Trinidad and Tobago prioritised selling natural gas to extra-regional markets rather than within the community. Further, the question of at what price it should sell its energy within CARICOM, the context of a single market is of lingering concern.

These are issues CARICOM’s leaders must face squarely. At the same time, global warming caused by the emission of greenhouse gases, of which the burning of fossil fuels is a major contributor, makes transitioning to alternatives an imperative, especially for the mostly small island states of the Caribbean.

Although separated by sea, the core CARICOM group, and associate members, are close to each other, making cross-border partnerships in energy, including renewable, technically feasible.

But such partnerships have to be in the context of a seamless market and economy. That should start with a clearly articulated regional energy policy, portions of which must be backed by the force of community law.