PETROCARIBE UPDATE #30: ANTIGUA AND BARBUDA

C O N F I D E N T I A L BRIDGETOWN 000162

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR, WHA/EPSC, WHA/AND, EEB/ESC/IEC/EPC
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 02/05/2017
TAGS: ENRG EPET PGOV PREL XL
SUBJECT: PETROCARIBE UPDATE #30: ANTIGUA AND BARBUDA

REF: BRIDGETOWN 133

Classified By: DCM Mary Ellen T. Gilroy for reasons 1.4 (b) and (d).

Summary
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1. (C) The Prime Minister of the Government of Antigua and
Barbuda (GOAB),Baldwin Spencer, continues to portray Hugo
Chavez as an altruistic benefactor and a friend of the
Caribbean. To date, both governments have signed agreements
with an estimated value of USD 48 million allocated
betweenthe GOAB's petroleum and aviation sectors. However,
critics have pointed out several flaws within these
arrangements and question the longer-term consequences of
this relationship. End Summary.

Petrocaribe Implementation
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2. (C) Last year, the GOAB finalized its Petrocaribe
agreement with the Government of Venezuela (BRV),which will
allow Antigua and Barbuda to access up to a million barrels
of oil per year. Similar to other Petrocaribe agreements in
the region, the GOAB will pay 60 percent of the costs upfront
and repay the balance over the next 23 years at a heavily
discounted interest rate of one percent. The BRV is allowing
a two-year moratorium before initial payments. To date, two
shipments totaling approximately 180,000 barrels of
Venezuelan fuel have been distributed in Antigua and Barbuda,
and a third shipment of approximately 90,000 is expected in
February. For the time being, storage and distribution
management will alternate between the West Indies Oil Company
and Shell. However, according to some foreign oil
representatives with whom EconOff spoke, Petroleos de
Venezuela's (PDVSA) ultimate goal remains to control all
storage and distribution in the region and eliminate its
competition.

Wind Beneath My Wings: BRV Supports Civil Aviation
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3. (C) The BRV reportedly offered the GOAB an estimated USD
20 million to subsidize the rescue of Leeward Islands Air
Transportation (LIAT) Airlines and LIAT's eventual merger
with Caribbean Star (reftel). The terms of the loan are
still unknown. This will mark the second time that the
Venezuelan government helped to save LIAT. The BRV advanced
money to form LIAT when Court Line Airlines collapsed in

1974. The BRV will also be paying for USD 7.5 million worth
of repairs in Antigua and Barbuda's V.C. Bird International
Airport. Unlike the airline loan, the funding for the
airport's facelift will be a grant, which will be used to
refurbish the terminal building, expand the departure lounge,
and repair air conditioning and electrical facilities. V.C.
Bird International Airport's new Chief Executive Officer, Ken
Hurst, told Econoff that none of the USD 7.5 million has yet
been spent, with only weeks before Cricket World Cup (CWC).
According to Hurst, the Venezuelan grant only represents a
small portion of the total planned expenditures for the
airport renovation project, which clearly will not be
completed before the March-April CWC.

The Critics Corner
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4. (C) According to the Managing Director of PDVSA for
Antigua and Barbuda, Dr. Percival Perry, the Petrocaribe
initiative is operating smoothly. However, criticism of BRV
support is beginning to surface. Foreign oil companies have
expressed concern that the BRV's long-term goal is to make it
impossible for them to operate in the Eastern Caribbean.
According to EconOff's contacts with SOL and Shell, if the
foreign companies pull out, the BRV would gain total control
over fuel supply, storage and distribution. One Op-Ed piece
in the Antiguan press reminded readers that Venezuela is an
OPEC member and recently expressed a desire for production
cutbacks -- a move that could have dramatic consequences if
PDVSA were to be the only supplier in the region. In Antigua
and Barbuda, former PM and current opposition figure Lester
Bird told the press that he is closely monitoring Venezuela's
USD 20 million loan for LIAT, which he considers a potential
burden on taxpayers (reftel).

Comment
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5. (C) Short term political and economic expediency is at the
root of the region's eagerness for Venezuelan largesse. Few
of the region's decision-makers stop to consider the possible
longer-term consequences, among them foreign investment
flight, loss of control over their countries' energy
policies, and narrowing of foreign policy options. Embassy
Bridgetown continues to address these issues with its Eastern
Caribbean counterparts, emphasizing the region's need to
focus on the implications of becoming too closely tied with
and economically dependent on the BRV.
OURISMAN