MercoPress. South Atlantic News Agency

Venezuelan “accessibly” priced oil for Paraguay

Venezuelan President Hugo Chavez last Saturday added Paraguay to its “accessible” energy supply scheme which will entitle the landlocked South American Mercosur member to defer 25% payment of the oil bill.

The bilateral agreement similar to that signed with other Caribbean and Central American countries and Uruguay in Mercosur contemplates "modest payments terms" deferring the 25% payment for up to 15 years with an annual interest rate of 2%.

President Chavez stopped over in Asunción, Paraguay, Mercosur's poorest member, Saturday for a few hours following his participation in the Mercosur Montevideo summit where Venezuela began proceedings to become a full member of the South American trade block, a process which can take from one to three years during which the country will have a voice "but not a vote".

The agreement establishes that Paraguay can either pay the oil invoices in full or 75% within 90 days, said Paraguay's government owned oil company, Petroleos Paraguayos (Petropar) chief Armando Rodriguez adding that the first Venezuelan shipment is scheduled to arrive next February/March.

Rodriguez added Venezuela expects to supply 70% of Paraguay's domestic demand, some 566,000 barrels, while the rest will be the traditional providers.

Chavez emphasized in the one-hour speech he delivered following the agreement signing ceremony that if "the price (of crude) keeps rising and passes certain level", Venezuela is prepared to accept a barter arrangement to pay for the oil. "The agreement will enable Paraguay to reallocate resources to social development and invest in increasing agriculture production", said Paraguayan President Nicanor Duarte.

Nevertheless the signing of the accord was delayed because Venezuela's PDVSA had demanded a letter of guarantee from Paraguayan authorities. A last minute private encounter between Duarte and Chavez saved the day with the promise that the Paraguayan Congress would turn the contract and accord into a bill.

Paraguayan Industry and Trade Minister Raul Vera said that this would be "the very first time that a Venezuelan oil tanker sails along the River Plate and the Paraguay River to deliver oil to Paraguay".

President Chavez, who is obsessed with cutting his country's dependency on exports to the Unites States, (Venezuela the world's fifth exporter is the US fourth supplier), said the agreement is another chapter of the energy continental integration process sponsored by Venezuela which besides Mercosur members already includes Colombia in South America. Venezuela has similar "deferred and barter" payment agreements with Uruguay and Argentina.