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.
Overall, Petrocaribe is a small part of Venezuelan oil exports. In 2013, when considering the outflow of oil products to Cuba, Petrocaribe and an additional preferential deal with Argentina totaled only about 240,600 barrels per day, a fraction of the country's 2.1 million bpd in overall exports. Venezuela continues to supply oil and refined fuels under the Petrocaribe scheme because those shipments do not significantly burden state-owned energy firm Petroleos de Venezuela, which is known by its Spanish acronym, PDVSA. However, Venezuela's depleted public finances and declining energy production have cast some doubt over the company's future willingness and ability to continue providing these shipments. Because of the fear of public backlash, Venezuela is unlikely to take decisive economic measures to alleviate the financial pressure on the energy sector anytime soon. Venezuela likely will continue Petrocaribe for as long as it can but will not hesitate to raise prices or reduce shipments if they threaten supplies to Cuba or its domestic market.
The most immediate impact of a reduction in Petrocaribe shipments would be energy supplies rapidly becoming more expensive for small states. Because of their extreme dependence on Petrocaribe for energy, Nicaragua, Jamaica, the Dominican Republic and Haiti likely would be the most affected by such a measure. Of the four countries, the Dominican Republic and Jamaica appear to be the best positioned to withstand a reduction or cutoff of Petrocaribe shipments. The Dominican Republic relies on Petrocaribe supplies for about 23 percent of its imports, and Jamaica relies on the discounted energy from Venezuela for about 32 percent of its imports. The other two receive more than 90 percent of supplies from Venezuela. In case of changes to Petrocaribe financing or volumes, these countries would be able to procure oil from the United States, although it would be at full price.
