ASSESSMENTS

Venezuela's Faltering Oil Sector Could Drag Down Petrocaribe

Aug 27, 2014 | 09:14 GMT

Venezuela's Faltering Oil Sector Could Drag Down Petrocaribe
The Petrocaribe summit in Managua in June 2013.

(INTI OCON/AFP/Getty Images)

Summary

The decline of the Venezuelan oil sector could have wider effects in Central America and the Caribbean. Venezuela supplies crude oil and refined fuel shipments at reduced cost to 15 countries in the region under the Petrocaribe pricing mechanism. Some of these countries depend on Venezuelan supplies for most of their energy use. Caracas has so far been able to maintain fuel supplies to these states because their low energy demands do not strain Venezuela's refining capacity. However, as Venezuela's energy sector declines — and public finances deteriorate — Venezuela eventually could change its terms for financing such shipments or reduce them altogether. 

Financial difficulties could lead Venezuela to alter the Petrocaribe energy-pricing scheme....

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