Oil, gas divide Caribbean stance on Venezuela

CARACAS - Oil and natural gas ties with Venezuela have divided Caribbean countries in their stance toward Venezuela, underscoring the Opec country's enduring political leverage.

The divisions were laid bare in a vote yesterday by the Washington-based Organization of American States (OAS) not to recognize the government of President Nicolas Maduro, who was sworn in to a second six-year term that many countries deem to be illegitimate.

The resolution presented by Colombia passed by 19 votes. Six countries voted against the resolution, eight abstained, including Mexico, and one country was absent.

Guyana, Jamaica and the Dominican Republic that are locked in oil-related disputes with Venezuela voted in favor of the resolution. But Trinidad and Tobago, which is negotiating significant natural gas deals with Maduro's government, abstained.

Jamaica and Trinidad nonetheless sent representatives to Maduro's re-inauguration ceremony in Caracas that coincided with the OAS vote.

Maduro won re-election in a 20 May poll that was not seen as meeting basic conditions for a free and fair vote. Venezuela said countries that supported the resolution had been coerced by Washington.

Jamaica supported the resolution "because its interest has always been, and continues to be, that of the well-being of the people of Venezuela," Jamaica's foreign minister Kamina Johnson Smith said.

The vote came two days after Jamaica said it is taking over Venezuelan state-owned PdV's 49pc stake in the island's 35,000 b/d Petrojam refinery, maintaining an earlier offer for $280mn. PdV has reneged on agreements to upgrade the refinery and has not responded to a year-old offer to buy its stake, Johnson Smith said.

Trinidad's abstention came amid negotiations with Venezuela over two major gas deals. One led by Shell would bring Venezuelan gas from the offshore Dragon field to Trinidad, for which the governments signed a term sheet in late August 2018, and which is projected to start delivering 150mn cf/d in 2020.

The two governments are also negotiating to develop Loran-Manatee, a 10 Tcf shallow-water field that straddles their border. Chevron would head up the project.

But both Jamaica and Trinidad sent representatives to Maduro's re-inauguration. Jamaica sent its diplomats in Caracas "as a sign of our interest in remaining engaged with Venezuela, with which we maintain diplomatic relations," Johnson Smith said.

Trinidad sent foreign minister Dennis Moses to the re-inauguration "because it recognized the government of Venezuela and stands ready to assist it as a neighbor," communications minister Stuart Young said.

Guyana's support of the OAS resolution comes amid a flare-up in a 19th century territorial dispute over a region where ExxonMobil has made massive oil discoveries since 2015. Venezuela claims the territory as its own. Members of the 15-member Caribbean trade group Caricom took a unified position last month in condemning a December incident involving the Venezuelan navy and the survey vessel contracted by ExxonMobil.

Venezuela has "violated Guyana's rights under international law … and posed a threat to the country's economic development and national security," said the group that includes Trinidad and Tobago, Barbados, Jamaica, Haiti and Suriname.

The Dominican Republic's support for the resolution, a departure from its previous stance, reflects a cooling of relations. PdV has become "an unreliable partner" and has not delivered a promised upgrade of the 34,000 b/d Refidomsa refinery in which it has a 49pc interest, according to Dominican officials.

The Netherlands boycotted Maduro's re-inauguration after consultations with the administrations of Aruba and Curacao, it said. The Hague controls both islands.

PdV's US subsidiary Citgo has failed to execute a long-term lease signed in 2016 in which it committed to transform the government-owned mothballed 280,000 b/d Aruba refinery into a heavy crude upgrader.

PdV is in the process of restarting its leased Isla refinery in Curacao, but the century-old refinery was barely operational in 2018 because of a lack of feedstock, maintenance and utility services. Motiva is negotiating with Curaçao to take over the lease.

Cuba's president Miguel Diaz-Canel was a high-profile participant in Maduro's re-inauguration, saying he was reaffirming Cuba's "solidarity" with political ally Venezuela. PdV supplies about 50,000 b/d of free oil to Cuba.

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