Jamaica Moving to Retake Shares Held by Venezuela in Petrojam

The Jamaica government Tuesday said it would enact special legislation that would allow it to forcibly retake the 49 per cent stake held by Venezuela in the state-owned oil refinery Petrojam.

“It will not be a general piece of legislation which allows for acquisition of property rights, other than land, beyond the scope of the transfer of ownership of the 49 per cent shares in PetroJam currently held by PDV Caribe,” Foreign Affairs and Foreign Trade Minister, Kamina Johnson Smith, told a news conference.

PDV Caribe, an affiliate of the state-owned Petroleos de Venezuela S.A., and the Petroleum Corporation of Jamaica (PCJ) entered into a joint venture agreement which resulted in the sale of PetroJam shares in August 2006 and February 2007 respectively.

The agreement had called for the upgrading and expansion of the refinery to improve its competitiveness and meet local and international market demands, but Johnson Smith said these objectives were not met and that this poses a risk to the economy.

She told reporters that Prime Minister Andrew Holness had led a delegation including then energy minister Dr Andrew Wheatley that held talks Venezuelan President Nicolás Maduro in May 2016 where Caracas gave a commitment to upgrading Petrojam.

The Foreign Affairs and Foreign Trade Minister said that after signing a Letter of Intent in January 2017 and a refinery upgrade agreement in February 2018, Venezuela has not fulfilled its obligations and that Kingston had made a formal offer to buy back the Petrojam shares in March 2018.

But she said that these efforts had not borne fruit and that Jamaica’s decision to retake the Petrojam shares was based on economic considerations and not political.

“But it has become clear that the shared priority and interest in Jamaica’s energy security, which drove PCJ and PDVSA to work together to operate and upgrade Petrojam, no longer exists,” Johnson Smith told reporters.

“Even as the government of Jamaica acknowledges, values and appreciates the tremendous support provided to this country by the Bolivarian Republic of Venezuela to the energy sector over the years, Jamaica regretfully cannot continue negotiations in perpetuity, especially where it appears that delays are of no concern to our counterparty.

“Therefore, in the national and economic interest of Jamaica, the decision has been taken to commence the legislative process towards acquiring the shares in Petrojam held by PDV Caribe,” said Johnson Smith.

In March last year, a government statement said that the attempt to take full control of Petrojam followed the decision by US President Donald Trump to issue an Executive imposing sanctions targeting the Government of Venezuela and its state-owned entities.

Wheatley told Parliament then that since the Trump announcement “the relationship between Petrojam Limited and PDVSA has come under intense scrutiny, both locally and internationally.”

The Ministry of Finance has set aside J$35 billion (One Jamaica dollar=US$0.008 cents) in the 2018/2019 budget to repurchase the shares.