Petrocaribe Agreement

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On August 23, 2005, the PetroCaribe Energy Cooperation Agreement was signed between Jamaica and the Bolivarian Republic of Venezuela for collaboration on a joint project to upgrade the Petrojam Refinery. This PetroCaribe Bilateral Agreement will also bring both long-term and short-term benefits to Jamaica’s energy sector.

Work on the upgrade of the Refinery has already begun with plans already far advanced in the redesign of the Plant for increasing production throughput from 36,000 barrels per day to 50,000 barrels per day. This will allow Petrojam to export petroleum products to neighbouring countries.

The upgrade, estimated to cost US$300 million, will be undertaken by Petrojam in partnership with the State-owned Petroleum Company of Venezuela (PDVSA) and is scheduled for completion in 2009. Venezuela will also share technical expertise to ensure the smooth implementation of the upgraded facility. To ensure full participation at all levels of the project, PDVSA has established an office in Jamaica to manage Venezuela’s input in the project. The Petrojam Refinery, a small refinery with a simple hydro-skimming design, typically produces about 45% of heavy fuel oil, a low margin product from the type of crude oil it normally processes. The upgrade will redesign and reconfigure the Refinery to process heavier, less costly crude oil from Venezuela, which will reduce the proportion of heavy fuel oil produced, and increase profitability on the sale of refinery products, manufactured by the upgraded refinery.

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