Omar Anderson, Gleaner Writer
CONSUMERS SHOULD by next month begin to pay less for petroleum products as a result of last week's signing of the Energy Co-operation Agreement - Petrocaribe - between Jamaica and Venezuela.
The agreement, which is a broadening of the Caracas Accord, will also result in the US$500 million expansion of the Petrojam oil refinery.
Phillip Paulwell, minister in charge of the energy sector, told reporters yesterday that the first shipment of crude oil under the Kingston/Caracas agreement is expected by month end.
Speaking at a press conference held at the New Kingston office of the Ministry of Commerce, Science, and Technology, the minister said a number of benefits are set to flow from the agreement.
"These benefits will have the immediate effect of easing the burden on the Jamaican economy caused by the rising oil price in the international market, which recently peaked at over US$60 per barrel," Mr. Paulwell said.
The benefits he outlined include:
Thirty to 90 days short-term credit for oil imported from Venezuela
Up to 50 per cent of the purchase value may be accessed as long-term loans if a barrel of oil hit the US$100 mark.
At a price of US$50 a barrel, Jamaica would pay 30 per cent of the purchase value in long-term loans.
TWO-YEAR GRACE PERIOD
"At the trigger price of US$40 per barrel, the payment period for these loans is extended to 25 years from the present 17 years," Mr. Paulwell stated. "This schedule includes a grace period of two years. Significantly, the interest rate will be at one per cent, down from the previous two per cent."
Another benefit flowing from the oil deal, the minister disclosed, is an opportunity for Jamaica to use goods and services to repay its long-term Petrocaribe oil loans.
"This opens an avenue for increasing trade between Jamaica and Venezuela in commodities such as banana and sugar which are now under threat from current trade policies," the minister stated.
Meanwhile, Mr. Paulwell stated that while in Venezuela last week, he signed a Memorandum of Understanding (MoU) with that country for the US$500-million Petrojam refinery upgrade.
This, he said, will result in Jamaica importing fewer finished oil products, thereby passing on savings to consumers.
"The result of the upgrade will be to expand the capacity of the refinery by about 42 per cent to 50,000 barrels per day, through the introduction of new processing technology..." he said.
The Venezuelan state-owned oil company, PDVSA, and Petroleum Corporation of Jamaica (PCJ) will have a 50-50 stake in the expansion.
Jamaica spent over US$800 million to import oil last year and this year's bill is estimated to reach US$1 billion.
