Key Provisions: The Agreement was signed between Belize and Venezuela on June 29, 2005.
Venezuela’s stated objective (of the Agreement): is to foster regional solidarity and alleviate financial hardship endured by countries in the Latin America-Caribbean region in the face of rising oil prices.
- The Agreement is for the direct sale of petroleum products – including diesel, gasoline, residual fuel oil, LPG, crude oil and lubricants – on concessionary financing terms, from Venezuela’s PDVSA (Petroléos de Venezuela, S.A). However, there are no price concessions, since Venezuela, as a member of OPEC, is obligated to sell its oil at market price
- Belize can import up to a monthly average of four thousand barrels per day. This is about 1.46 million barrels of petroleum products per year. Belize currently uses just under 1 million barrels of petroleum products per year.
- The Agreement provides for a portion of each invoice (for each different product being purchased), called the ‘Financed Portion’, to be paid over 15 years at 2% interest rate with a two-year grace period, if the FOB spot price of the product being purchased is equal to or less than $40 USD per barrel. If the FOB spot price of the product purchased is higher than $40 USD per barrel, then the financing period extends to 25 years and the interest rate falls to 1%.
- As shown in Schedule I below, the level of the ‘Financed Portion’ also increases as the price per barrel of the petroleum products purchased increases.
- The remaining portion of the invoice, called the ‘Cash Portion’, is payable within 90 days, with a financing charge of 2% per annum levied after 30 days.