Jamaica places money owed to Venezuela for oil and Petrojam in escrow account

Jamaica’s state-run oil refinery, Petrojam (Photo: Petrojam)

The Ministry of Finance in Jamaica indicated on Monday, October 14, that it was paying into an escrow account money owed for oil, to include for the takeover of the country’s stake in oil refinery Petrojam.

The ministry outlined that, in order to avoid becoming itself the subject of United States sanctions, the country had chosen this means for setting aside what was owed to the South American nation, which is the subject of US sanctions.

The Government of Jamaica (GOJ) is pursuing payback for oil received under the PetroCaribe agreement, a subsidised commodity, putting payments from time-to-time in the escrow account to defray US$115 million in total.

The Ministry of Finance also outlined that it is making a separate payment, also periodically for the takeover of state-owned Petróleos de Venezuela, SA’s (PVDSA) 49% stake in Jamaica’s Petrojam refinery.

Venezuelan company PDV Caribe SA, a subsidiary of PDVSA, owned a minority but still sizeable share in the Kingston refinery, but this was expropriated by Act of Parliament by the Jamaican government earlier in 2019.

The total being paid for the shares was not mentioned in the Ministry of Finance communication.

US sanctions stop the GOJ from making payments straight to any government account belonging to the Maduro Government which has been blacklisted by US authorities.

Workers on-site at Venezuelan state oil company PDVSA (Photo: pdvsa.com)

The US sanctions have the objective of dislodging Venezuelan president Nicolas Maduro.

Jamaica’s Ministry of Finance began to cut down its PetroCaribe obligations in 2015, using US$2billon it raised on the international capital market to retire US$3 billion of its PetroCaribe debt for US$1.5 billion.

The Jamaican government has said that the expropriation of shares will facilitate an urgently needed upgrade of the oil refinery.