JAMAICA and Venezuela last night agreed on the broad outlines of an initial US$200-million modernisation and expansion of the Petrojam oil refinery in Kingston, a memorandum on which was signed last night by Prime Minister P J Patterson and the Venezuelan president, Hugo Chavez.

Chavez arrived in Jamaica from Cuba yesterday for a one-day visit, but he touched down more than eight hours later than scheduled, causing what should have been a late afternoon private meeting between himself and Patterson to turn into a late night tête-à-tête.

“Today’s visit was very short.but it was a very fruitful and productive visit,” Patterson said at a news conference after his talks with Chavez.

In fact, Chavez spoke of yesterday’s visit and the PetroCaribe initiative in the context of the efforts of the 19th century Latin American liberator Simon Bolivar to create a single nation on the South American continent.

“Today, something memorable is happening here in Montego Bay,” he told reporters.

Chavez, who was accompanied by at least eight senior ministers and scores of other officials, said his visit to Jamaica was important to the advancement of regional integration efforts.

“We came here to firmly advance the Jamaica-Venezuela-Petrocaribe energy alliance and, moreover, Caribbean integration and South American integration,” Chavez said.

Earlier, both men met together with their respective delegations and which, Phillip Paulwell, the technology and energy minister, had confirmed the go-ahead on the Petrojam upgrading which will lift the capacity of the near 40-year-old refinery from 35,000 barrels to 50,000 barrels a day. Work should begin in the last quarter of 2006, Paulwell said.

“We are agreed now on a timeline for the implementation of the project,” Paulwell said. “We are agreed on the full participation of Venezuela and also we are agreed on the establishment of the joint company between PDVSA (the Venezuelan state oil company) and Petrojam that will carry forward the expansion and upgrade of the refinery,” Paulwell told reporters. Petrojam is a subsidiary of the government’s Petroleum Corporation of Jamaica (PCJ).

The agreement also contemplates the joint venture expansion of the PetCom service station network. PetCom, like Petrojam, is a PCJ subsidiary. It is estimated to control about 10 per cent of the retail market for petrol.

The Petrojam modernisation is to be one of the projects under Chavez’s PetroCaribe energy initiative in which Venezuela will provide cheap oil to Caribbean countries. It also proposes, through multilateral partnerships, to control the transportation and distribution of the products in the region.

Several regional countries have already signed on to the PetroCaribe proposal, but Trinidad and Tobago, the English-speaking Caribbean’s only significant producer and refiner of oil, has so far stayed out of the pact, fearing that Chavez’s initiative will wipe out its Caribbean markets.

Barbados has also expressed concern in solidarity with the Trinidadians. Paulwell, however, said that a summit of regional leaders on September 6, it is hoped, will resolve the concerns. “President Chavez will be back in Jamaica at that time,” Paulwell said.

“We are hoping that by the 6th of September it will be sorted out there.” But with its own oil bill ballooning, threatening to drive inflation and undermine its fiscal targets, Jamaica, already the beneficiary of preferential oil arrangements from Venezuela and Mexico under the San Jose Accord, is keen to push ahead with the PetroCaribe projects, including the Petrojam upgrading.

According to Pauwell, the initial expansion apart, more work is projected for the refinery under the initiative, but he did not say what was contemplated.

“The second phase will cost us between US$250 million and US$350 million,” he said.