Chavez extends oil largesse

CIENFUEGOS, Cuba - Venezuelan President Hugo Chavez proposed on Friday extending a barter scheme used by Cuba to other Caribbean and Central American nations to help them pay for oil supplies with products and services.

At a summit of his growing regional energy alliance, Petrocaribe, the leftist firebrand attacked the United States and other rich consumer nations for squandering their unfair share of world resources.

"In spite of the Yankees, our oil and gas will always be at the service, first of Venezuela, and at the same time of our brother nations of Latin American and the Caribbean," he said.

"We have begun to create a new geopolitics of oil that is not at the service of the interests of imperialism and big capitalists," Chavez said in a speech.

Chavez, the fiercest antagonist of the United States in the region despite being a major U.S. oil supplier, opened a revamped Soviet-era refinery in Cienfuegos, Cuba that will supply diesel, gasoline and jet fuel to members of Petrocaribe.

The Petrocaribe alliance, which has bolstered Chavez's regional influence since it started in 2005, grew to 17 countries on Friday with the entry of Honduras, a traditional U.S. ally. Guatemala's president-elect also wants to join.

Chavez said the debts of Petrocaribe members to Venezuela has reached $1.16 billion (586 million pounds) in little more than a year of preferentially financed supplies, and is estimated to rise to $4.6 billion by 2010.

He proposed debts be offset by local products and services, following the example of Cuba, which has sent 20,000 doctors and teachers to Venezuela in exchange for crude and refined products now estimated to value $3 billion a year.

"We propose adding to the financed portion of the oil bill a method of payment that includes the supply of a series of local products and services," he said.

Venezuelan Energy and Petroleum Minister Rafael Ramirez said the barter scheme had worked very well for Venezuela. "It has allowed us to lift up our health system and education," Ramirez told reporters.

DEFERRED PAYMENTS, LOW INTEREST

Petrocaribe allows members to defer payment on 40 percent of their Venezuelan oil bill for up to 25 years, with interest of only 1 percent.

Critics say the deal supplies oil at market prices and is increasing the indebtedness of small Caribbean states.

Billboards featuring Chavez and ailing Cuban leader Fidel Castro greeted the Venezuelan president in Cienfuegos, a port city 160 miles (256 km) southwest of Havana. Castro has not appeared in public since falling ill in mid-2006. His brother and acting Cuban President Raul Castro co-hosted the summit.

Chavez has helped Cuba's economically battered economy stay afloat with 92,000 barrels per day of crude oil paid for by the medical services of Cuban doctors treating Venezuela's poor.

In addition, Cuba has started receiving crude shipments for the 65,000-bpd Cienfuegos refinery, a joint venture between Cuban state oil company CUPET and Venezuelan counterpart PDVSA, which has invested $166 million in restarting the plant.

The refinery was mothballed 12 years ago after the Soviet Union collapsed, depriving Cuba of subsidized oil supplies and technology and plunging it into a deep economic crisis.

The Cienfuegos refinery will produce fuel oil, diesel, gasoline and jet fuel for the Cuban domestic market and for export to Nicaragua, Belize, Honduras and Haiti.

At its opening, Chavez said Petrocaribe planned to build 10 refineries and refurbish another eight at a cost of $22 billion over the next 10 years to cover the region's supply of refined products.

Raul Castro, running Cuba since his brother underwent stomach surgery 16 months ago, said the U.S. trade embargo had prevented Cuba from operating the Cienfuegos refinery since 1995.

"It has not been easy to keep our socialist revolution going with a fierce enemy 90 miles (145 km) away, but we are here to stay," he said.