June 30, 2005

Venezuela’s Chavez creates Caribbean energy pact

By Magdalena Morales

PUERTO LA CRUZ, Venezuela (Reuters) - Oil exporterVenezuela signed an energy cooperation pact on Wednesday with13 Caribbean states, including Cuba, in a move thatstrengthened Venezuelan President Hugo Chavez's politicalchallenge to U.S. influence in the region.

The Petrocaribe alliance, under which Venezuela willdirectly supply cheaper oil to its partners, will cut theenergy bills of Caribbean states whose small island economiesare struggling to cope with soaring world oil prices.

But in a disappointment for Chavez, two Caribbean states,fellow oil and gas producer Trinidad and Tobago and Barbados,did not initial the Petrocaribe accord. Trinidad expressedreservations the deal could undercut its own oil shipments.

Nationalist Chavez and other Caribbean leaders hailed theenergy pact as a move that will increase their collectivesovereignty and economic independence in a region longdominated by U.S. political and commercial power.

"For the countries of the Caribbean, Petrocaribe representsa welcome lifeline," Jamaican Prime Minister P.J. Pattersontold the meeting of Caribbean leaders, including CubanPresident Fidel Castro.

Venezuela is the world's fifth largest oil exporter and aleading oil supplier to the United States, but Chavez isseeking to diversify energy ties.

"Venezuela wants to share its energy potential with SouthAmerica and the Caribbean," Chavez said earlier as he outlinedthe Petrocaribe initiative, which will create a regional oilshipment, storage and refining network promoted by Venezuela.

Chavez said this would eliminate intermediary private oiltraders and offer improved preferential terms for payment.


In a verbal broadside against the United States, Chavezaccused Washington of meddling in his efforts to create thePetrocaribe alliance and said he may one day have to break offrelations.

He made the warning after reading a letter critical of hisrule, which he said was sent by the State Department to some ofthe Caribbean nations attending the meeting.

"We would have reasons to break relations with this (U.S.)government, out of dignity," Chavez said angrily.

He said the U.S. letter sent to Caribbean leaders spelledout Washington's concern over "threats to Venezuela'sdemocracy" under his rule. It also accused him of usingVenezuela's oil to try to destabilize countries like Boliviaand Ecuador by supporting radical groups, he added.

U.S. officials have portrayed Chavez and Castro astroublemakers bent on stirring up left-wing revolution andanti-U.S. sentiment in Latin America and the world.

Chavez said Venezuelan state oil company PDVSA had createdan affiliate, PDV Caribe, to coordinate the Petrocaribe plan.

The initiative is part of Chavez's effort to bolsterCaribbean and Latin American economic unity to counter what hecalls "imperialist" U.S. free-trade policies.

"It gets Venezuela more votes in the Organization ofAmerican States and consolidates Chavez politically," saidMichael Shifter of Inter-American Dialogue, a Washington-basedthink tank.

Venezuela also signed Wednesday a fresh bilateral oilsupply contract with the Dominican Republic and a memorandum ofunderstanding to possibly invest in a Jamaican refinery.

The nations which attended the Venezuela summit wereAntigua and Barbuda, Barbados, Bahamas, Belize, Cuba, DominicanRepublic, Grenada, Guyana, Jamaica, Dominica, St. Kitts andNevis, St. Lucia, St. Vincent and the Grenadines, Suriname andTrinidad and Tobago.