Venezuela Lauds Agreement with Esso

EFE December 21, 2007

Venezuelan Ambassador Miguel Gómez this week applauded the decision by U.S. oil giant Esso Standard Oil to allow Nicaragua’s state-run oil company Petróleos de Nicaragua (Petronic) to use Esso storage facilities to import Venezuelan oil.

“Nicaragua will clearly be able to take advantage of the oil agreement with Venezuela, that until now, due to a lack of storage, wasn’t able to be completed,” the diplomat said at a press conference.

The decision came after months of Esso’s refusal of government requests to allow Petronic to use its port storage infrastructure to import Venezuelan oil.

Ortega blamed Esso of standing in the way of an agreement between him and Venezuelan President Hugo Chávez to import 10 million barrels of Venezuelan crude a year under preferential payment terms to be refined and distributed in Nicaragua.

Due to its lack of infrastructure, Nicaragua only imported a fifth of the oil promised this year by Venezuela (NT, Dec. 14).

“Evidently now, with this new agreement, the flow of crude oil will be much greater,” the ambassador said.

Under the agreement with Esso, Petronic will rent Esso’s oil storage facilities in the Pacific port of Corinto until the end of next year, at which time Petronic will purchase the port’s seven oil containers for a still undetermined price.

Petronic Director Francisco López said the deal provides the country with a capacity to import at least 10 million barrels a year, or 25,000 a day. Petronic will pay Esso $1.14 per barrel imported under the agreement.

López, who signed the agreement with Esso, is also the Vice President of Albanisa, a mixed Venezuelan-Nicaraguan oil company that was created in July.

The agreement also includes plans for Esso to eventually purchase the Venezuelan oil from Petronic.

As part of the deal with Venezuela, Nicaragua pays half of its Venezuelan oil imports within 90 days, and the rest within 25 years at a 1% interest rate and a two-year grace period.

The President of the Superior Council of Private Businesses (COSEP), José Adán Aguerri, who participated in the signing of the agreement last week, said he was satisfied with the arrangement and stressed that it is a commercial agreement, not a “nationalization” of imports, as local press have claimed.