The Venezuelan Government, amidst its own cash flow turmoil, has committed to strengthen the PetroCaribe agreement with Jamaica, regardless of the price of crude oil.

The International Monetary Fund (IMF) last year warned Caribbean and Latin American countries that have co-operation agreements, such as PetroCaribe, with Venezuela, that it could mean trouble for their economies if the South American country’s external liquidity problems get worse.

But minister of science, technology, energy, and mining, Phillip Paulwell told the Jamaica Observer that Venezuela had made it clear at a special heads of state meeting in Caracas last week that its agreement with Jamaica was on solid footing. He represented Prime Minister Portia Simpson Miller at the meeting.

Among the critical arrangements put on the table at the meeting was a bilateral agreement to speed up the expansion of the state oil refinery, to phase out the use of heavy fuel oil.

He noted that this ties into the Government’s 360 megawatt project, which will see three plants generating power using ethane, LNG, and coal.

“The JPSCo now uses heavy fuel oil and diesel substantially for the generation of electricity. These new plants won’t be using those products. They will be looking at ethane, LNG, and in one instance it could be coal,” Paulwell said.

“This is why an important aspect of the work they are doing in Venezuela, to upgrade and expand the (Petrojam) refinery is so crucial, because the refinery is going to use a substantial amount of heavy fuel oil and diesel will no longer be required from Venezuela,” Paulwell said.

He emphasised that, “we are adamant and they have agreed, that this project must move, so that we can produce less of the heavy fuel oil and diesel and more of those products that we use, such as gasoline and LPG and so on. That is the reason we now have to move in greater earnest so that when we lose the heavy fuel oil market, with the 360-megawatt project coming on stream, we will be able to move seamlessly to new products and the refinery will continue to be viable”.

Venezuela also took a decision to identify a special oil well which is to be dedicated to PetroCaribe states. Paulwell said that the well is expected to “secure for the foreseeable future, the supplies that we need”.

Venezuela has also dedicated a US$200-million fund to assist PetroCaribe states with projects that are aimed at lowering their use of crude oil, and moving towards greater use of renewable energy.

In the meantime, the Venezuelan Government wants to get cracking on the long-discussed PetroCaribe economic zone.

“They have agreed that within 60 days, they will put flesh and bones to the concept, whereby in addition to the sale and distribution of petroleum products, there will be greater opportunity for other goods and services to be incorporated into the PetroCaribe arrangement,” the minister disclosed.

A team of Venezuelan officials is to visit the island shortly to start putting plans in place for the trade facility, which is expected to give some teeth to the compensation mechanism built into the PetroCaribe agreement.

Paulwell said so far, the Jamaican Government has sold clinker, valued at more than US$20 million, under the trade compensation mechanism. The trading of clinker represents the repayment of a portion of the island’s oil debt to Venezuela, which stood at approximately US$2.5 billion up to the end of 2013.

Carib Cement Company supplies Venezuela with the material, which is a common element of Portland cement.

“Other things have been put on the table [such as] pharmaceutical items, commercial paint, canned goods… they have agreed that we need to concentrate on getting some of these other things dealt with,” the energy minister said. The Venezuelan officials are expected to iron out the details during their visit.

The provisions of the PetrocCaribe economic zone are to be finalised at the 10th anniversary summit of the agreement, to be held in Jamaica later this year.