16-07-08 Costa Rica has been invited to join Venezuela's PetroCaribe oil program and may soon begin receiving oil on newly relaxed financing terms as world oil prices soar. Costa Rica would become the fifth Central American country to benefit from PetroCaribe's preferential terms, which have become increasingly attractive as international oil prices hover near record highs of $ 140.
Costa Rica sent delegates to attend the group's summit, when President Hugo Chavez announced that he was easing financing terms. Member nations will now be required to pay just 40 % of the bill within 90 days -- down from the earlier 50 %. He said the rest can be paid over the next 25 years at a fixed interest rate of 1 % as long as oil prices are above $ 100 a barrel. If prices rise above $ 150 a barrel, he said, just 30 % may be paid up front.

Costa Rica's foreign ministry said after the summit that it sees "no obstacle" to joining. It would become PetroCaribe's 19th member. Other Central American countries include Nicaragua, Honduras, Belize and Guatemala -- which joined the pact. Most of the accord's other beneficiaries are Caribbean islands.
Venezuela has financed $ 2 bn -- or 43 % -- of the 59 mm barrels of oil it has sent since 2005, official figures show. Member countries have saved an estimated $ 921 mm. After Jamaica and the Dominican Republic, Nicaragua was the largest recipient of financing at $ 197 mm.

Venezuela's state petroleum company has said it is planning a refinery in Nicaragua that is expected to meet demand completely in the country and largely in the rest of Central America. Operations are expected to begin in 2012 and reach 150,000 bpd by 2019. Still, Central American countries are going to "play it safe" by not relying exclusively on Venezuela for their energy needs, said Roseanne Franco, a lead analyst with Washington-based PFC Energy.
"They'll still be importing from other sources," Franco said. "It's highly unlikely that they'll become dependent on Venezuela."

Chavez -- who has long promoted an agenda of regional independence from the United States -- is using PetroCaribe to spread his influence beyond Venezuela's borders, said Patrick Esteruelas, a New York-based analyst with the Eurasia group. But the pact is still falling short of its goals. Oil Minister Rafael Ramirez said member countries are now receiving 86,000 bpd -- significantly less than their quota of 125,000 -- due to storage and transportation problems.
And while Venezuela's opposition has called PetroCaribe "bribery diplomacy," political support from member nations may be minimal, analysts say.

"I think they might be willing to accept the help," said Sarah Ladislaw, an energy and national security fellow at the Washington-based Centre for Strategic and International Studies.
"But at the end of the day I'm not sure it adds up to a heck of a lot in terms of geopolitical sway."