continued on page 2/ Caribbean Energy Information System (CEIS) December 2011 s ince the birth of the Petro- caribe agreement in 2005 many people have been trying to ascertain if the advantages of Petrocaribe have outweighed the disadvantages. In this issue of the pub- lication we will attempt to explain the agreement, highlight what has been achieved by Caribbean nations through this agreement and also take a look at the possible implications of the 25 years loan agreement. About Petrocaribe Petrocaribe started as an Energy Cooperation Agreement signed by 14 countries (Antigua and Barbuda, Bahamas, Be- lize, Cuba, Dominica, Guyana, Haiti, Jamaica, Nicaragua, Dominican Republic, Guatemala, St. Kitts, St. Lucia and Suriname) that were al- ready “concerned about global economy trends and, particularly, about policies and practices pre- vailing in industrialized countries that could lead to more exclusion of the Third World smaller countries with economies that are more dependent on international developments.” Cur- rently there are 18 countries that are part of the Agreement. Deferred Financing Mechanism (DFM) The most crucial or important compo- nent of the agreement is an innovative financing arrangement DFM whereby a percentage of the value of each invoice for petroleum products purchased from Venezuela is made available to the purchasing Government/Country as a long-term concessionary loan payable over a period of up to 25 years. The interest rate, period of the loan and amount financed is linked to the price of oil in the international marketplace. If the price of oil exceeds US$40/BBL between 30% and 70% of the invoiced amount is financed and this loan at- tracts a 1% interest rate per annum, repayable over 25 years inclusive of a 2 years moratorium period. If the price of oil falls below US$40/BBL between 5% and 25% of each invoice is financed over 17 years (inclusive of 2 years moratorium) at a 2% interest rate per annum. This is considered a “win- win” for many Caribbean countries that have signed on to the Agreement as there is guaranteed supply for the countries life blood (petroleum) and access to attractive financing or repay- ment arrangements that are not avail- able anywhere else. Table 1 (see over- leaf) indicates the quotas available to each CEIS member country that signed the Agreement and Table 2 below provides an idea of how payments are calculated using the Deferred Financ- ing Mechanism. CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights petroleum issues affecting or relevant to the Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally. To access CEIS website CONTACT US Caribbean Energy Information System Scientific Research Council Hope Gardens, Kingston 6, Jamaica 1-876-927-1779 (Telephone) 1-876-977-1840 (Fax) [email protected]www.ceis-caribenergy.org Source: www.petroleumworld.com Source: www.petroleumworld.com Source: www.petroleumworld.com
CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights petroleum issues affecting or relevant to the Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally.
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continued on page 2/
Caribbean Energy Information System (CEIS)
December 2011
s ince the birth of the Petro-
caribe agreement in 2005
many people have been trying
to ascertain if the advantages
of Petrocaribe have outweighed the
disadvantages. In this issue of the pub-
lication we will attempt to explain the
agreement, highlight what has been
achieved by Caribbean nations through
this agreement and also take a look at
the possible implications of the 25
years loan agreement.
About Petrocaribe
Petrocaribe started as
an Energy Cooperation
Agreement signed by
14 countries (Antigua and
Barbuda, Bahamas, Be-
lize, Cuba, Dominica,
Guyana, Haiti, Jamaica,
Nicaragua, Dominican
Republic, Guatemala,
St. Kitts, St. Lucia and
Suriname) that were al-
ready “concerned about
global economy trends
and, particularly, about
policies and practices pre-
vailing in industrialized
countries that could lead
to more exclusion of the
Third World smaller
countries with economies
that are more dependent
on international developments.” Cur-
rently there are 18 countries that are
part of the Agreement.
Deferred Financing Mechanism
(DFM)
The most crucial or important compo-
nent of the agreement is an innovative
financing arrangement DFM whereby
a percentage of the value of
each invoice for petroleum
products purchased from
Venezuela is made available to the
purchasing Government/Country as a
long-term concessionary loan payable
over a period of up to 25 years. The
interest rate, period of the loan and
amount financed is linked to the price
of oil in the international marketplace.
If the price of oil exceeds US$40/BBL
between 30% and 70% of the invoiced
amount is financed and this loan at-
tracts a 1% interest rate per annum,
repayable over 25 years inclusive of a
2 years moratorium period. If the price
of oil falls below US$40/BBL between
5% and 25% of each invoice is
financed over 17 years (inclusive of 2
years moratorium) at a 2% interest rate
per annum. This is considered a “win-
win” for many Caribbean countries
that have signed on to the Agreement
as there is guaranteed supply for the
countries life blood (petroleum) and
access to attractive financing or repay-
ment arrangements that are not avail-
able anywhere else. Table 1 (see over-
leaf) indicates the quotas available to
each CEIS member country that signed
the Agreement and Table 2 below
provides an idea of how payments are
calculated using the Deferred Financ-
ing Mechanism.
CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights petroleum issues affecting or relevant to the
Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally.
Total Amount Due over Life of Loan - Principal + Interest (US$) (1153.8) (2550.5) (4190.2) (7044.4) (11841.8) (16860.5) (36244.4) (56775.2) (102539.5) (120432.3)
Total Interest Accrued over Life of Loan (US$) (203.8) (450.5) (740.2) (1244.4) (2091.8) (2160.5) (4644.4) (7275.2) (13139.5) (15432.3)
Total Interest Expressed as % of Loan at the end LoanTenor 21.5 21.5 21.5 21.5 21.5 14.7 14.7 14.7 14.7 14.7
Table 1: Example of Petrocaribe Deferred Financing Mechanism using 1000 Barrels Per Day and
prices as per Rate Schedule as outlined in Agreement.
Table 1: Example of Petrocaribe Deferred Financing Mechanism using 1000 Barrels Per Day and
prices as per Rate Schedule as outlined in Agreement.
Note: Interest calculated for the 2 years moratorium period is capitalized/compounded. Note: Interest calculated for the 2 years moratorium period is capitalized/compounded.
continued on page 3/
Table 2
10KBDSuriname9
1.2KBDSt Kitts8
23.5KBDJamaica7
5.2KBDGuyana6
50KBDDominican Republic5
1KBDDominica4
92.3KBDCuba3
4KBDBelize2
4.4KBDAntigua and Barbuda1
Supply quota (2011)Country
10KBDSuriname9
1.2KBDSt Kitts8
23.5KBDJamaica7
5.2KBDGuyana6
50KBDDominican Republic5
1KBDDominica4
92.3KBDCuba3
4KBDBelize2
4.4KBDAntigua and Barbuda1
Supply quota (2011)Country
Note: Barbados, Trinidad & Tobago, the Bahamas and St.
Lucia have not signed the Bi-lateral Petrocaribe Agreement.
Table 1: Quotas Allowed for Oil Imports under Petrocaribe.
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
REGULAR UNLEADED GASOLINE AVERAGE PRICES AT THE PUMP
January - December 2011
CHART
See prices for other products at See prices for other products at See prices for other products at www.ceiswww.ceiswww.ceis---caribenergy.orgcaribenergy.orgcaribenergy.org ...