updated 8/24/2005 12:06:53 PM ET 2005-08-24T16:06:53

Jamaica became the first Caribbean nation to finalize an agreement with Venezuela on a new plan for the South American nation to supply oil to countries throughout the region under below-market terms.

Prime Minister P.J. Patterson emerged from a private meeting with Venezuelan President Hugo Chavez late Tuesday to announce the details of Jamaica's participation in the Petrocaribe initiative -- a plan to offer oil at flexible terms to 13 Caribbean nations.

Chavez announced the Petrocaribe project in June, though he disclosed few of the details. He and his close ally Cuban leader Fidel Castro have said the plan would lead toward greater solidarity for small nations as oil prices continue to rise.

Chavez and Castro see themselves as a counterweight to U.S. influence in the region, even as Venezuela supplies 1.3 million barrels of oil a day to the United States -- 8 percent of the total supply.

Under the agreement with Jamaica, Venezuela will provide oil at a discounted rate of $40 per barrel, compared to the more than $60 it now costs on the world market, Patterson said.

The deal, which takes effect June 29, will initially involve about 22,000 barrels per day, the prime minister said.

Jamaica will be able to pay Venezuela in goods and services as well as through low-interest, long-term loans, he said.

"Much has been accomplished by strengthening the relationship between Venezuela and Jamaica," the prime minister said at a news conference that ended after midnight in the resort city of Montego Bay.

Chavez, who noted that "the era of cheap oil is over," said that Venezuela is providing assistance superior to what has been offered by lending institutions such as the International Monetary Fund and the World Bank.

"Don't thank us. It is the call of conscience," Chavez said.

Petrocaribe extends and improves financing arrangements under past oil deals and calls for an expanded fleet of Venezuelan tankers to deliver fuel directly to bypass costly intermediaries.

Chavez and Patterson also signed a bilateral agreement committing Venezuela to upgrading a refinery's production capacity from 30,000 barrels a day to 50,000 barrels a day. Venezuela has also agreed to contribute $60 million to a fund for socio-economic projects in Jamaica.

Venezuelan officials have been touring several Caribbean countries to follow up on the Petrocaribe agreement signed in June.

Venezuela is the world's fifth-largest oil exporter and the biggest in the Western Hemisphere.

Chavez has extended preferential oil deals to countries throughout the Caribbean and Latin America, and to some as far away as China, seeking to strengthen political alliances as he moves to line up alternate oil markets aside from the United States, which he often criticizes as "The Empire."

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com