Presidents Hugo Chavez and Leonel Fernandez signed the reinstatement of the suspended Accord of Caracas at the Presidential Palace on Saturday. In the 6 November agreement, Venezuela commits itself to supply 50,000 barrels of oil or equivalent forms of fuel per day to the Dominican Republic. In a joint press conference held after the signing of the agreement, complements the San Jose Oil Pact that already establishes credits based on 20% of oil sales, the statesmen announced that with world market prices at more than US$30 the barrel, 25% of the bill will be financed at 2% annual interest for 15-year periods, with a grace period of one year to pay the capital. Furthermore, the DR may pay the credits in goods and services. The one-year agreement is automatically renewable.
In addition, the Venezuelan government also committed to collaborate in the exploration for oil in the DR and train Dominican technicians.
President Leonel Fernandez described the agreement as “an expression of generosity and solidarity not very common in today’s world, in which market conditions prevail.”
The DR presently sources fuel from Venezuela at US$40, at a time world market prices are at around US$55 the barrel. The Listin Diario newspaper points out that at the present price level, the agreement could represent savings of US$200 million on the trade balance.
The DR consumes 140,000 barrels of oil a day, of which 110,000 are imported from Venezuela. These imports were suspended in September 2003 after a clash between former President Hipolito Mejia and President Chavez. The Venezuelan leader complained that former Venezuelan President Carlos Andres Perez was conspiring against him from Dominican territory.
Following the signing of the agreement, Chavez and Fernandez inaugurated the Plaza Simon Bolivar at Maximo Gomez and Bolivar avenues. As a donation from the government of Venezuela, the plaza was completed in 2002, but was not inaugurated given the conflict between then-President Mejia and President Chavez.