Monday, June 02, 2014

El Salvador and Petrocaribe

In El Salvador, newly inaugurated president Salvador Sánchez Cerén announced he's setting up a deal with Petrocaribe. It would entail getting $1.2 billion of oil but only paying $600 million with 1% interest over 25 years.

I've made the argument before that Nicolás Maduro would have to back off Petrocaribe given his own economic problems. So does the El Salvador deal refute that? Not quite. In 2013 Guatemala pulled out because it never got the promised preferential deal. This year Honduras said Venezuela was changing the rules as it went. The Dominican Republic is getting less oil than it was promised. The Planning Minister of Trinidad and Tobago has said publicly that Petrocaribe is too risky to be a sustainable source of energy.

So the real question is whether El Salvador will actually see that oil at that price on those terms.


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