Business
Venezuela tightening oil exports to Jamaica
IT APPEARS that all may not be well at the state-owned oil refinery. A notation in the revised public bodies budget recently presented to Parliament indicates that Petrojam has been hit with a major problem.”…
Venezuela is now tightening its exports to Jamaica under the Petro Caribe agreement.
This has resulted in Petrojam being forced to buy oil at a on the spot market to fill the shortfall putting pressure on its cash flow.
Since May, Venezuela has been strictly enforcing the quota system whereby only two shipments of crude were being allowed under the Petro Caribe Agreement.
Under the PetroCaribe arrangement, Jamaica pays only 60 per cent of the cost of the oil from Venezuela. The remainder is set aside as a loan which is payable over 20 years at an interest rate of one per cent.
Jamaica has had to be purchasing the product out of Venezuela in order to fulfill the amount required for Jamaica’s energy needs which will result in significantly lower profits from the refinery (Petrojam), as the crude purchased will cost significantly more and there is no saving.
In 2009, Prime Minister Bruce Golding said that a shift in the PetroCaribe agreement could significantly impact Jamaica’s fiscal accounts.
At that time, Jamaica was receiving three shipments of crude from Venezuela per week, a situation which has now changed with the country now receiving only two shipments under the PetroCarib agreement.