(Adds Chavez quote in ninth paragraph)
By Anthony Boadle
CIENFUEGOS, Cuba, Dec 21 (Reuters) - Venezuelan President Hugo Chavez offered Caribbean and Central American nations the option on Friday to pay for already cheap oil supplies with local products, such as bananas and sugar.
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, was due to open a revamped Soviet-era refinery in 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 admission of Honduras, a traditional U.S. ally.
Chavez recognized the debt of Petrocaribe members with Venezuela has reached $1.16 billion in little more than a year of supplies, and is estimated to rise to $4.6 billion by 2010. He proposed debts be offset with local products and services.
Chavez did not say how local products would be used to pay down debt, but he said it would be the same method used by Cuba, which pays for oil supplies with medical and other services.
“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.
Venezuela said it was supplying only 53,000 barrels per day to Petrocaribe members of a possible 102,000 bpd due to the lack of transport and storage facilities.
The deal 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 Venezuelan oil at market prices and is actually increasing the indebtedness of small Caribbean states still reeling from the loss of preferential markets for bananas and sugar in the European Union.
Billboards of 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 and 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 bpd that Havana pays for with the medical services of thousands of doctors treating Venezuela’s poor.
In addition, Cuba has started receiving crude oil shipments for the 65,000-bpd Cienfuegos refinery, a joint venture between the state oil companies of Cuba, CUPET, and Venezuela, 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 and Honduras.
The first shipment of Venezuelan oil — 274,000 barrels of Mesa 30 and Merey 16 crude — arrived in Cienfuegos Bay three weeks ago for the refinery’s start-up.
The Venezuelan-Cuban joint venture plans to expand the refinery’s capacity to 109,000 bpd by 2010 at a cost of $1.3 billion, supplying feedstock for a petrochemical complex to be built next door.
The refinery start-up was only partial, with the catalytic cracker unit still not working, only primary distilling, a refinery official said.
An oil industry source said the fuel oil would be used in Cuba for power generation and the nickel industry, with the refinery looking to place 400,000 tonnes of gasoline and 200,000 tonnes of jet fuel on the market in 2008. (Editing by Bill Trott)