Venezuelan President Chavez Speaks at a Previous Petrocaribe Summit Meeting.

Costa Rica hopes to be able to adhere to Petrocaribe, an initiative designed by Hugo Chavez, the controversial President of Venezuela, which means buying fuel at a more advantageous cost. This agreement could save the country up to 60% of its oil bill, for a period of 25 years, and with two years period of grace and a fixed interest rate of 1% when a barrel of crude oil exceeds $100. The remaining 40% can be paid in installments every 90 days, without interest.

Should a barrel of crude oil exceed $150, the benefits would be extended. In this case, 70% of the total purchase of crude oil as well as its end products (gas or diesel) would be financed for 25 years, this including a two year grace period. Currently, Costa Rica buys 95% of the oil it refines from Venezuela, this is to say, some 18,000 barrels a day with only 8 days to pay for them. This initiative would also guarantee a regular supply of oil into the country.

According to Chancellor Bruno Stagno, the possibility of Costa Rica being allowed to enter this program are good: “I see no obstacle to Costa Rica’s integration in this initiative,” he said. “And our recommendation to President Arias is that we incorporate.”

Chancellor Stagno, the minister of Conservation and Energy Roberto Doble, and the executive president of Costa Rica’s Oil Refinery (Recope) Jose Lion Desanti, attended the Petrocaribe summit meeting last weekend in Maracaibo, in Venezuela. Representatives from the Costa Rica government were initially only invited to participate as observers, however during the meetings, the country was formally asked to join the initiative. Staff members gave some details yesterday of what they consider to be seals that joins the country to Petrocaribe, which has already integrated 18 countries in Central America and in the Caribbean.

Stagno added that joining this plan does not bring in any economical or political costs. He said that the meeting between members of Petrocaribe was a very serious affair, dedicated to discussion about fuel costs and not politics. None of the other member nations have had to adhere to any political requirements, and he does not see why Costa Rica’s deal with Petrocaribe should be any different.

President Arias said he is excited about the possibility of being included in this initiative, pointing out, however, that joining Petrocaribe will have no direct benefit to the consumers and will not affect the price of diesel or gasoline. It will, however, considerably benefit the economy of the country, which this year expects to pay around $2.8 billion towards fuel, more than double what it paid in 2007. The high fuel prices have also created a nearly $60 million debt for Recope.

It is unclear if Costa Rica will have to wait until December, during the next presidential meeting between members of Petrocaribe, or if the country can be included as soon as possible, despite not being an active member of the group. Arias will be discussing this with Chavez in the coming days to clarify.

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Filed under: Costa Rica News on July 16th, 2008