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Minister of Foreign Affairs and Foreign Trade, Senator the Honourable Kamina Johnson Smith has announced that Jamaica is seeking to take ownership of the 49% percent shares in PetroJam held by Venezuelan state-owned oil and natural gas company PDV CARIBE, a subsidiary of Petróleos de Venezuela S.A. (PDVSA). This move forms part of the Government’s thrust to develop and protect Jamaica’s energy security.
According to Johnson Smith, PDV Caribe, an affiliate of the state-owned Petróleos de Venezuela S.A. (PDVSA) and the Petroleum Corporation of Jamaica (PCJ) entered into a Joint Venture Agreement and an agreement to sell shares in Petrojam in August 2006 and February 2007 respectively. The reasons for entering into the agreements included the upgrading and expansion of Petrojam’s Refinery so as to improve its competitiveness and meet local and international market demands. However, the Foreign Minister noted that as at this time these objectives have not been met and Refinery is now a risk to the economy and the country as result of the upgrade not being undertaken.
Minister Johnson Smith said, “Jamaica faces the possibility of disruption of refining operations, if it is not in a position to execute the refinery upgrade. This is primarily due to its imminent international obligations stipulated by the International Maritime Organization regulations regarding HFO which becomes effective in January 1, 2020 as well as the transition of the Jamaica Public Service Company Limited to Liquefied Natural Gas, thereby reducing the need for heavy fuel oil produced by Petrojam”.
During the press briefing the Minister revealed that, “The Government of Jamaica met with President Maduro and senior ministers from his administration in 2016, where a commitment was made by President Maduro that action would be taken on the upgrade. After signing a Letter of Intent in January 2017, and the Refinery Upgrade Agreement in February 2018, Venezuela has not fulfilled their obligations.”
The Foreign Minister made clear, “Jamaica’s decision is not political. It is purely economic. But it has become clear that the shared priority and interest in Jamaica’s energy security which drove PCJ and PDVSA to work together to operate and upgrade Petrojam, no longer exists.”
She also emphasized that, “For Jamaica to prosper and uplift our people, we must ensure our energy security. The action proposed is in the public interest and in the interest of each and every Jamaican.”
Additionally, over the last year, Petrojam’s operations have been particularly affected by third country sanctions imposed against the Venezuelan Government and its state-owned entities. The ongoing geopolitical challenges being experienced by Venezuela has heightened over the last two years.
Similarly, the action being proposed with respect to the Petrojam shares does not impact the PetroCaribe agreement, in respect of which Jamaica continues to fully honour its obligations.
She also stated that, “Even as the Government of Jamaica acknowledges, values and appreciates the tremendous support provided to this country by the Bolivarian Republic of Venezuela to the energy sector over the years, Jamaica regretfully cannot continue negotiations in perpetuity, especially where it appears that delays are of no concern to our counterparty. Therefore, in the national and economic interest of Jamaica, the decision has been taken to commence the legislative process towards acquiring the shares in Petrojam held by PDV Caribe.”
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