December 14, 2014 / 7:16 PM / 3 years ago

Venezuela wants to expand oil diplomacy despite falling prices

HAVANA (Reuters) - Venezuelan President Nicolas Maduro told leftist allies from Latin America on Sunday he wanted to expand the Petrocaribe program of providing oil at preferential terms, even as falling oil prices add more stress to the Venezuelan economy.

A man pumps gasoline at a service station in Caracas August 7, 2014. REUTERS/Jorge Silva

Speaking in Cuba at a summit of the leftist ALBA bloc of nine countries from Latin America and the Caribbean, Maduro did not mention the impact of a 46 percent decline in oil prices since June.

Instead, the leader of the OPEC country spoke of expanding the 18-nation Petrocaribe, even as Petrocaribe has struggled to keep up supplies. Shipments fell 11 percent in 2013 to the lowest level since 2007, forcing beneficiaries to turn to other sources.

“Petrocaribe, what it must do at this stage, is consolidate, strengthen, grow and deploy itself with even more strength,” Maduro said.

Former Venezuelan President Hugo Chavez created Petrocaribe in 2005 to help neighbors cope with rising energy costs, letting them finance 60 percent of their purchases.

But Venezuela’s capacity to serve as benefactor to the region has suffered with its economy, which is in apparent recession with inflation at 60 percent and foreign reserves shrinking. Seven ALBA countries are also in Petrocaribe.

Maduro’s comments reflected the defiant yet optimistic tone of the summit, at which leaders criticized the United States for its 52-year-old economic embargo against Cuba and more recent sanctions against Venezuela. Passed by the U.S. House of Representatives on Wednesday, they were imposed after 43 people were killed in violence following anti-government street protests earlier this year.

The summit marked the 10th anniversary of the formation of ALBA, the brainchild of Chavez, who died last year, and retired Cuban leader Fidel Castro.

Maduro, Nicaraguan President Daniel Ortega, Bolivian President Evo Morales and other leaders from the region attended the summit, which was led by Cuban President Raul Castro.

Absent was Ecuadoran President Rafael Correa. Correa also missed a special ALBA summit on Ebola held in Cuba in October.

Financially strapped Venezuela is considering a plan to raise cash by selling billion of dollars of Petrocaribe debt owed to it for 40 cents on the dollar or less, according to a Wall Street analyst with knowledge of the deal.

Venezuela would sell $7 billion worth of Petrocaribe debt from the Dominican Republican and Jamaica to Wall Street for $2 billion to $3 billion in cash up front, converting outstanding invoices for oil shipped into bonds.

Reporting by Daniel Trotta; Editing by Catherine Evans

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