Jamaica sets aside Venezuela oil payments

Jamaica's government is repaying Venezuela for past subsidized oil supply but is depositing periodic payments in escrow accounts in the island's central bank, the Jamaican finance ministry said.

The country's owes $115mn for the past imports of crude and refined products under Venezuela's PetroCaribe preferential oil supply facility, which is now effectively defunct.

The PetroCaribe payments in escrow are accompanied by a separate Jamaican government payment for its takeover of Venezuelan state-owned PdV's 49pc stake in Jamaica's Petrojam refinery, the ministry said.

Under PetroCaribe, beneficiaries such as Jamaica could retain most of the payments as low-interest, long-term loans. In its heyday around 2005-15, PetroCaribe was a way for Caracas to curry political favor with neighboring countries. The program collapsed in recent years because of Venezuela's declining domestic production and refining.

Venezuela is now the target of US sanctions which prohibit Jamaica from making any direct payment to its former oil supplier. "The payments are being held in these accounts because at this time, we do not know who to pay this money to, and we do not want to be a victim of the US sanctions."

The US sanctions are aimed at dislodging Venezuelan president Nicolas Maduro in favor of opposition leader Juan Guaido, who is recognized as interim president by most Western countries, including the US.

But Jamaica maintains an ambivalent stance on the political conflicting Venezuela. The island's government recognizes neither Maduro nor Guaido.

Jamaica reduced its PetroCaribe obligations in 2015 when its used $2bn it raised on the international capital market to retire $3bn of its PetroCaribe debt at a price of $1.5bn.

Jamaica expropriated PdV's asset in Petrojam on claims the company had reneged on a project to help upgrade and expand the 35,000 b/d facility to 50,000 b/d. Jamaica now owns 100pc of Petrojam.