Brief History

A Brief History of Petro-Caribe in Belize: 2005-2009 The first shipment of Petro-Caribe oil arrived in Belize from Venezuela in early November, 2005 with no prior formal notice to the Government of Belize: apparently as a good-will gesture on the part of Venezuela to signal its commitment to Petro-Caribe in Belize. It was delivered to the port in Belize City for off-loading at the ESSO Depot. However, since no prior arrangements had been made with ESSO or any of the local petroleum distributors, the shipment was held up for four days before it could be off loaded. It was subsequently purchased at a significant discount by the Banana Enterprises Ltd, a subsidiary of the Big Creek Group of Companies, a company operating out of the Stann Creek District. As a consequence of ESSO’s continued reluctance to receive any further shipments of Petro-Caribe oil, Government was forced to seek out other alternatives to get Petro-Caribe going in Belize.

In June 2007, Government, through a specially-formed company, Belize Petroelum and Energy Limited (hereinafter, BPEL), signed a contract with Petro Fuel Belize Limited (hereinafter, PFBL), a subsidiary of the same Big Creek Group, to purchase refined petroleum products, lubricants and LPG (delivered under the Petro-Caribe Agreement) from BPEL for selling and distribution into the local market. PFBL would import the products through the port at Big Creek, which was also owned by PFBL’s parent company, the Big Creek Group, and would be responsible for all costs related to receipt, storage, distribution, marketing and retailing of the products.

The supply contract between BPEL and PFBL mirrored almost identically – and was actually based on – the supply contract between PDVSA and BPEL signed at the start of the program. Taken together, the contracts ensured that GOB would retain the full benefit of the concessionary long-term financing terms offered by Venezuela; while the full short-term financing benefits were passed on to PFBL.

Outcomes and Challenges with the PCP over the period 2007-2009

During the period 2007 to 2009, PVDSA delivered 457,680 barrels (19,222,560 gallons) of refined petroleum products, valuing over $41 million USD (FOB), in fifteen (15) shipments to Belize through the Big Creek Port under the terms of the agreement. These products were sold almost exclusively in Southern Belize, mainly to industrial consumers, as it was not viable to compete with ESSO further north due to the difference in transportation charges between the two areas. Even so, according to PFBL, this business model could not be sustained because the landed cost of the PDSVA supply was higher than the supply from ESSO, due to higher freight and insurance charges for transporting from Venezuela which were out of the PFBL’s control. This situation was further complicated because fuel price changes were triggered only when shipments were received by ESSO.

The last shipment of Petro-Caribe oil into Belize before the 2009-2012 hiatus was received in April 2009. PFBL did not make any further requests for supply, as required by the contract, beyond this date. PDVSA apparently made a unilateral decision, applicable to all Petro-Caribe member countries, that the local Government-owned party to the contracts – BPEL in Belize’s case – should be replaced by a joint venture of state-owned companies of both Venezuela and the recipient country. It appears that the authorities in Venezuela were not satisfied with the supply business model being utilized amid feedback from other countries that the benefits of Petro-Caribe were being channeled away from the intended beneficiaries of the program, the Government and People of the recipient countries, towards a coterie of private interests; and hence sought to exert tighter control over the program. A planned visit by PDVSA officials to Belize since 2009 to setup this new arrangement never materialized; and no serious effort was made by any of the parties to revive the program since that time until 2012.