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Research Report

Uncertain Energy: The Caribbean’s Gamble with Venezuela

David L. Goldwyn
Cory R. Gill
Copyright Date: Jul. 1, 2014
Published by: Atlantic Council
Pages: 28
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Table of Contents

  1. (pp. 1-1)
    Peter Schechter and Jason Marczak

    Venezuela’s socioeconomic woes and political turbulence have continued to worsen in the first half of 2014. The domestic political economy has plummeted into indefinite turbulence. The ripples are being felt far and wide including the threat of energy insecurity throughout the Caribbean and Central America. As oil production slows, the future of the world’s second-largest proven reserves hangs over a region heavily dependent on Venezuelan energy exports.

    Amid the uncertainty, President Nicolás Maduro’s influence on the region is being questioned. Can he maintain his predecessor’s clout among his most immediate neighbors? And can events in Venezuela create upheaval in the...

  2. (pp. 5-7)

    On June 29, 2005, Venezuela built on its history of providing credit financing for purchases of its energy exports to launch the Petrocaribe program with thirteen Caribbean countries. Today, although seventeen countries are technically Petrocaribe members, only thirteen nations—Antigua and Barbuda, Belize, Dominica, Dominican Republic, El Salvador, Grenada, Guyana, Haiti, Jamaica, Nicaragua, St. Kitts and Nevis, St. Vincent and the Grenadines, and Suriname-are active members.³ Although Cuba is an official Petrocaribe member, the Convenio Integral de Cooperación Cuba-Venezuela (CIC), signed in 2000, serves as the primary legal instrument governing Venezuela’s energy ties with Cuba. Because of this arrangement and...

  3. (pp. 8-11)

    Venezuela has proven capable of sustaining Petrocaribe through significant political, economic, and oil sector headwinds. The quantity of crude and petroleum products supplied by Venezuela to Petrocaribe recipient states increased from 86,000 (barrels of oil per day) bpd in 2008 to 121,000 bpd in 2012 [see figure 2].

    Additionally, although Venezuelan refined product exports to Cuba declined following reactivation of the Cienfuegos refinery in 2008, overall combined crude and product exports have remained quite steady, totaling 91,000 bpd in 2012 [see figure 3]. While reliable Petrocaribe export data disaggregated by product is difficult to attain, product exports largely include fuel...

  4. (pp. 12-17)

    The United States has already become the dominant supplier of petroleum products to the Caribbean region, a consequence of the shale oil boom. US product exports to Petrocaribe states totaled 160,000 bpd in 2012, well above Venezuela’s 121,000 bpd in combined crude and product exports. This marks a significant change from 2009, when US exports, which totaled approximately 109,000 bpd that year, were just below Venezuela’s 110,000 bpd.20 These exports provide Caribbean states with a stable source of petroleum products. (US law prohibits exports of crude oil at this time.)

    The United States has security, climate, and economic interests in...

  5. (pp. 18-19)

    1 Treat the Caribbean’s energy uncertainties as both a priority and an opportunity. The region’s energy security vulnerabilities present US foreign policymakers with a rare opportunity to proactively prevent a crisis. By launching an effort to transform Caribbean energy, the United States can forestall a potential fiscal crisis in the region and promote closer diplomatic relations at a relatively low cost. The desire of Caribbean nations for US support for energy transformation and the vice president’s commitment to engagement in the hemisphere present a historic opportunity to restore regional ties and redirect Caribbean economies to a more competitive and lower...