PETROJAM'S RESPONSE TO ARTICLE: "VENEZUELA TIGHTENS OIL SUPPLY TO JAMAICA"

The Editor
The Gleaner Company
7 North Street, Kingston

Editor:

Please find below Petrojam’s response to article, “Venezuela Tightens Oil Supply to Jamaica”.

PETROJAM RESPONSE TO ARTICLE
“Venezuela Tightens Oil Supply to Jamaica”

No Change in Oil Quota

Petrojam Limited wishes to clarify a number of issues raised in Daraine Luton’s Gleaner article titled, Venezuela Tightens Oil Supplies to JA, dated Tuesday, September 13, 2011. In this article, Mr. Luton appears to suggest that there is dissonance between the earlier responses of Petrojam’s General Manager, Winston Watson and the recent publication of Public Bodies Accounts in Parliament. This is not so.

We wish to emphasize the following points:

There has been no change in Jamaica’s quota under the provisions of the PetroCaribe Energy Cooperation Agreement. The quota remains at 23, 500 barrels per day, which amounts to approximately 700,000 barrels per month. This is equivalent to two (2) crude oil cargoes of approximately 350,000 barrels each.

The PetroCaribe quota of 23,500 barrels per day represents less than 50% of Jamaica’s oil requirements.  It was never intended to cover all of Jamaica’s oil demand. Our refinery processes about 30,000 barrels of crude oil per day and the gap is filled by purchasing crude oil from other parties.

Whether we purchase oil under the PetroCaribe Agreement or not, has very little impact on the Company’s cash flows; nor does it affect the refinery’s profitability. Venezuela sells petroleum to Petrojam at market prices through the PetroCaribe Agreement and Petrojam pays the applicable portion under the Agreement to Venezuela and the other portion to the Government of Jamaica.

It is normal for Petrojam to purchase oil on the spot market or outside of Venezuela; as we maintain a diversified supply base in order to ensure a secure, consistent, and uninterrupted supply of products to the Jamaican market.  

We hope these points will clarify any misperceptions.

Sincerely,

PETROJAM LIMITED