Under the accord, Venezuela's state oil firm PDVSA will supply 18,600 barrels a day of crude, refined products and liquid petroleum gas (LPG) to Paraguay for one year.
The date for the first shipment is February 2005, Paraguay's presidential news service reported.
Under the preferential financing terms, Paraguay must pay 75% of the value of the fuel within 90 days, while the remaining 25% is payable over 15 years at 2% fixed annual interest. Paraguay is also able to pay for all or some of the fuel with products or services, the news service reported.
Similar to Venezuela's arrangement with Argentina, Paraguay could pay for some of the fuel from PDVSA with food products. Paraguay imports all its fuels, and has found the process to be costly considering high international oil prices. State oil firm Petropar's existing fuel purchase contracts expire in January 2005.
Duarte thanked Chávez for the accord, and said it will allow Petropar to free up about US$75mn a year for social programs and other investments to reduce rural poverty. "I am sure that this is just the first step to realizing our legitimate dreams," Duarte said.
For his part, Chávez recognized the high cost Paraguay has been paying to import fuel given current oil prices. "That is why we, with the signing of this agreement for hydrocarbons sales, have shown our willingness to take responsibility, through PDVSA, to ship to [Paraguay's capital city] Asunción as much fuel as the Paraguayan people need," he said.
Venezuela aims to accelerate bilateral cooperation agreements in Latin America as part of President Chávez's regional strategy of energy integration.
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