Petrocaribe Agreement Deconstructed

John Mencias

The agreement provides for a portion of each invoice, known as the Financed Portion, to be paid over fifteen years at two percent interest with a two-year grace period.  That is if the price of the product being purchased amounts to or is less than forty U.S. dollars per barrel.  Mencias provides additional details.

John Mencias, Deputy Chair, APBEL

“The way the Petrocaribe program is set up, the finance portion is not tied to crude oil prices.  It’s tied to the actual price of the final refined petroleum products.  So when you hear out there media reports that the price, for example, I’ll give a good example.  When the price of crude oil had fallen to twenty-eight dollars per barrel, the price of diesel was about forty dollars per barrel, you understand me, so there is this, and right now it has gone back up.  I think we are around sixty or seventy dollars a barrel and I think we are seeing an increase in the price of fuel at the pump as a result of that.  So there is always, whenever you hear anybody give you a number for the price of crude, you need to add anywhere around ten to twenty dollars on top of that to get a better sense of what the price of refined fuels would cost. When the price of oil falls the total sales revenue or the price will fall and on top of that you also get a lower percentage that is financed because the whole idea of the program is to help you out when things get tough.  When oil prices jump up they take a larger portion and finance it.”

Reporter

“So what percentage is that?”

John Mencias

“Well, it has varied it has dropped to forty percent sometime way back, at one time it went up to seventy percent in finance when the bill was very high.”