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The fuel storage dept at Lowmans Bay. (Photo: Lance Neverson/Facebook)
The fuel storage dept at Lowmans Bay. (Photo: Lance Neverson/Facebook)

As the United States’ sanctions against Venezuela tighten, St. Vincent and the Grenadines has been forced to innovate to ensure continued fuel security and the upkeep of a Caracas-funded fuel storage plant.

The Hugo Chavez National Fuel Storage Facility at Lowmans Bay, capable of storing 34,000 barrels of fuel, was in April 2015.

The joint venture between the governments of SVG and Venezuela, was constructed at a total cost of US$31.6 million under Caracas’ oil initiative, PetroCaribe.

At a press conference last week, Prime Minister Ralph Gonsalves reiterated that SVG is not getting much fuel from Venezuela under PetroCaribe, Caracas’ oil initiative with a number of Caribbean nations.

He said this is an indirect effect of the sanctions that Washington has imposed on the South American capital.

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Gonsalves said that the tanker that transports fuel from Venezuela to SVG is not big and is contracted for in a number of different ways

Venezuela does not own the vessels and payment for their services must be made through a US account.

“We have a small sum of money for Venezuela under the PetroCaribe agreement — relatively small — but we can’t get it to them because of the financial restrictions,” said Gonsalves, whose government began benefitting from PetroCaribe in 2005.

“So if they can’t get money to the shippers, the ships ain’t coming. When the ship don’t come, you don’t get the fuel and we don’t get the financing component of the PetroCaribe, which pays for things like the SET (Support for Education and Training) Programme and they do some poverty reduction programmes and some other specific things and we have given reports over and over about what we have used PetroCaribe monies for…

“Now, I will tell you this: even our staff at our mission in Venezuela, we can’t get the money to them because you have to employ people to do certain things at the mission, chauffer, secretarial staff and the rest of it. These are people you will employ from within that country.

“You have difficulty getting their money for them because of the sanctions.”

“So when you have some right wing people here and some others that are unthinking say, ‘Aah, what a wonderful thing that America is doing, squeezing Venezuela so no foreign currency can pass to go to any of the banks’, they don’t realise what they are supporting is to even hurt ourselves,” he said.

Gonsalves noted that the fuel storage facility at Lowmans Bay has diesel storage of 22,000 barrels in addition to 10,000 barrels of gasoline and 2,500 barrels of Jet A-1 fuel, and 2,500 barrels of LPG

Gonsalves said that Rubis, one of the petroleum products suppliers in SVG, has its own Jet A-1 storage facility that can store.

“Now, as you know, if you don’t have those facilities and you don’t use them, they will go into disuse…” Gonsalves said.

He said there are two options, the first being renting the facilities, adding that at least one entity wants to rent them.

The second option is that PetroCaribe SVG, a state-owned company, could buy the fuel and sell from there.

The prime minister said he has, therefore, given PetroCaribe SVG permission to purchase fuel.

In September, the company bought 6,990 barrels of diesel at a cost of E$1.9 million and 3,200 barrels of gasoline, costing EC$874,000.

Gonsalves said that the inventory at the time was 12,590 barrels of diesel, 5,275 barrels of gasoline, 1,300 barrels of LPG, and 748 barrels of a diesel gasoline mix.

A local distributor is buying the diesel-gasoline mix, the prime minister said.

Gonsalves said that PetroCaribe is in discussion with Vinlec, the state-owned electricity company to continue to purchase fuel from the PetroCaribe.

“We purchase from one of the two traders here in St. Vincent and the Grenadines and the price is competitive because of the volumes,” he said.

Regarding the proposed continued use of the state-owned fuel farm, Gonsalves said:

“It’s using an asset which we have. It doesn’t make sense leaving the asset there. That asset is about $80 million — a big asset. So we use it and we use it to be able to make some money. Simple, straightforward, and, at the same time, to provide energy security because you know we have had the maximum 10, 12 days or thereabout of supply.”

He said that Petrotrin, the state-owned oil company in Trinidad and Tobago, no longer exists and Sol and Rubis — the retailers in SVG — will have to buy fuel further north, for examples in The Bahamas, the Dutch Antilles, the east coast of the United States, or Antigua, where West Indies Oil operates a large, state-owned storage facility.

He, however, said that if fuel is brought from the United States or the Bahamas and there are two back-to-back hurricanes in the area, there might be a problem with the supply.

“So it’s a good thing that we have a facility where we can have three months’ supply.

“Of course, when the government takes an initiative which is grounded in common sense, you always will hear commentaries to the contrary, but we do what we have to do from all the facts which are before us and to make sensible decisions,” Gonsalves said, in apparent anticipation of a response to the development.

4 replies on “US sanctions force PetroCaribe rethink in SVG”

  1. The global financial system is dominated by the US with the USD as the global reserve currency. Any action taken by the US to block trade in US dollars would always have implication for other countries. That is why sanctions from the US can be a useful tool in cajoling other nation state into toeing the line. Despite its regional ascendancy, Kingstown dependance on oil and on the global financial system will continue to shape its policies to placate the local electorate. This is also an inherent weakness in addition to its vulnerabilities to other external shocks. Reducing these dependencies would give Kingstown more room to maneuver hence the attempt at geothermal energy and the setting up of mini Solar PV plants on strategic government building as well as the planned investment in energy saving lighting for government building and street lighting. While these approaches may reduce SVG energy dependence, reducing its financial dependency is not going to be easy unless a new system of trade outside of the USD emerges. The EU attempts to bypass the US renewed sanctions on Iran has forced it to create a new financial mechanism for trade with Iran which is dominated in euros. It left to be seen whether this special purpose vehicle will survive to become an alternative route for the global financial system thus giving nation states like St Vincent more room to maneuver around US sanctions.

  2. No country in the world can escape the US financial reach. It is the world’s largest economy by a long reach. The entire international monetary system is built upon the faith in the US dollar. When added to the fact that the US is the world most powerful military by a long reach, the US’s capacity to coerce other nations to do its bidding is second to none.

  3. We should never have become involved with ALBA and all its rabble of members. We should never of become involved with Cuba or Venezuela, and now Russia. All the problems that are now coming our way were created by Gonsalves, and they will only get worse.

  4. all great powers fall …….etc. Egyptian , Assyrian , Babylonian , Persian , Greek, Roman ……… propaganda will never overrule proven history and FACTS.

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