After public pronouncements of concern by Petrocaribe member countries the Venezuelan state oil company Petroleos de Venezuela SA has been reassuring the importers it has no plans to toughen conditions under which Petrocaribe members buy Venezuelan oil.

Reports earlier this month that President Hugo Chavez wanted to revise the pact, under which Caribbean and Central American countries buy Venezuelan oil on special payment terms, sparked a flurry of diplomatic activity in the region.

Caribbean officials interpreted Venezuela's payment review as a response to declining oil income and economic downturn. This week's official figures indicated that despite infusions of oil revenues in a consumer boom the country's economy slowed in the second quarter of 2009.

Earlier this month Caracas was reportedly seeking up to 80 percent down payment on oil imported by Petrocaribe members, but Venezuelan officials now say that was never the plan.

Whether Venezuela will continue with the existing pact's payment regime or seek adjustments in its provisions has not been made clear in recent comments from Venezuela.

Petrocaribe member countries are Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, the Dominican Republic, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, St. Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia, Suriname and Venezuela. Barbados and Trinidad & Tobago are the only two Caribbean countries that are not part of Petrocaribe.

Petrocaribe came into effect in June 2005 amid high oil prices and offered welcome relief to the region with its easy payment options for Venezuelan oil. The member countries pay for their oil importers at 60 percent of the market price and the rest at 1 percent interest over 25 years. The percentage is known to vary as oil prices fluctuate and higher prices often mean a lower down payment.

At the last Petrocaribe summit in Basseterre, the capital of St. Christopher and Nevis, in June, Chavez said he would continue with Petrocaribe's preferential payments system for the Caribbean and Central American importers of Venezuelan oil no matter what happened in the market.

"Many things are said, but Petrocaribe will be sounder every day. It is our commitment, regardless of the international situation and oil prices," he declared at the summit.

Soon afterward, Petrocaribe countries learned that Venezuela asked for more cash upfront and a lesser percentage of the oil bill on deferred terms.

Guyana President Bharrat Jagdeo reacted to "the impending changes in the agreement," warning those could present "grave difficulties for some of our member states."

Jagdeo is the current head of a task force, appointed by the Caribbean Community CARICOM, examining the impact of the global economic crisis on the region. He is also responsible for negotiating with Venezuela on Petrocaribe.

Jagdeo said he intended to approach Venezuela "to say that we would like the impending changes altered or delayed." Caribbean analysts have said the region's national budgets are predicated on Petrocaribe's payment terms, major changes to which may spell disaster for those economies. Whether Caribbean representations led to a rethink on the pact in Caracas remains unclear, they said.

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