Environmental Engineering Reference
In-Depth Information
Chavez's petro-aid
Since 2005 Venezuela has been supplying its oil on preferential terms to
fourteen of its Caribbean and central American neighbouring states under a
scheme called Petrocaribe. This allows participants to buy a portion of their
Venezuelan oil purchase on credit with very soft terms (a 25-year maturity at
1 percent interest per annum). The proportion of oil payable with this credit
varies according to the oil price on a sliding scale - when the price is $100 a
barrel or more, the oil purchaser can get 50 percent of the oil on the soft credit,
but only 5 percent of the oil on credit if the oil price is $15 a barrel. Under the
Petrocaribe scheme, Venezuelan oil can also be paid for with local commodities
such as bananas, rice or sugar.
The scheme expands to the wider region the sort of preferential oil arrange-
ments that Venezuela's left-wing president has already extended to Cuba
(which in return has sent doctors and teachers to Venezuela). There is no
doubt the Petrocaribe scheme has been appreciated by Venezuela's smaller
and poorer neighbours, especially during the 2004-08 climb in the oil price.
On the other hand, provision of cheap oil obviously does not encourage these
countries to restructure their energy supply and prepare for a day when cheap
oil is no longer available from a post-Chavez Venezuela.
Venezuela had received some advice on energy efficiency, recycling and emis-
sion control from London, under an arrangement reached by the ex-mayor,
the left-wing Ken Livingstone, in which London received some Venezuelan oil
at a discount. The discount was passed on in the form of cheaper bus fares for
poorer Londoners. But Livingstone's Conservative successor, Boris Johnson,
cancelled the deal on taking office in 2008. Chavez has also provided Boston
and New York with cheap oil.
only because its production is by far the biggest, but also because of its
professionalism. Similarly, Abu Dhabi sought no confrontation with
the IOCs when it came to create the Abu Dhabi National Oil Company
(Adnoc), and still allows IOCs to operate on its territory. By contrast, the
NOCs of Iran and Algeria bear the hallmarks of their countries' more
revolutionary tradition.
But what all NOCs have in common is the wider political, social and
economic objectives that their state owners give them. This responsibility
is inevitable: after all they are the guardians of their nation's oil, for the
nation's benefit. However, it does mean that NOCs' revenues are often
diverted to goals other than oil. A dramatic example of this is the use by
President Hugo Chavez of Venezuela's oil revenue. In 1997, the year before
Chavez came to power, Petroleos de Venezuela (PdVsa) spent $77m on
social and cultural activities, but in 2005 it spent $7bn on these causes.
