Notes From The Margin

June 16, 2008

Marginal Picks Up His Pen – Venezuelas Claim of Barbados’ Waters


After much thought we’ve decided to come out of retirement to blog on the subject of Venezuela’s claim of Barbados’ waters. This is not a full re-opening of NFTM but we felt that given our history of blogging on Venezuela and it’s territorial claims that we might be able to provide some clarity on this issue. This article is freely reproducible (once the source is attributed). In fact we would ask that given the potential seriousness of the claim that members of the blogosphere and other media propogate this story.


Marginal

Like Barbados Free Press we saw the story today in the Venezuelan publication PetroleumWorld entitled “Barbados’ Troubled Waters”

The new government of Barbados opened the bidding process for rights to offshore blocks for oil & gas exploration on Monday and will close it on September 30. The winner announcement will be made on Nov 20th. More than 20 companies were present this week in the bid kick off, including among others, Exxon, Gazprom, Lukoil Shell, BHP Billiton of Australia, Hess Oil Company, Anadarko Petroleum Corporation, Marathon Oil and Murphy Oil, all of the United States, StatoilHydro, Petro-Canada, and Petrobras from Brazil. However, there is an issue that the IOC’s perhaps have not taken in account, that is that two of the block are in venezuelan waters, the Bottom Bay blocks Ad I and Ad II. We expect that the venezuelan government will issue a diplomatic note to the government of Barbados asking for clarification and the Venezuelan oil company PDVSA will issue a warning to the OIC’s on the issue.

The two blocks in question are the two southernmost blocks that are up for bid (Highlighted in red in the illustration). Venezuela’s claim rests on two pillars

1. It’s claim to approximately half of Guyana’s land area.

Venezuela claims everything west of the Essequibo river, the historical reasons for this can be found in our post. Venezuela and Its Claim of Most of Guyana’s Land

2. Venezuela’s Maritime Treaty with Trinidad.

In 1990 Venezuela and Trinidad agreed a treaty delineating their maritime boundary. This treaty can be found on line HERE.  This treaty allowed the development of Trinidad and Tobago’s offshore oil resources. However this treaty had two unforeseen impacts. First it tacitly recognised Venezuela’s claims on half of Guyana, and secondly it pushed Trinidad’s territorial claims north which is what led to the Maritime border dispute between Barbados and Trinidad. The impact of this can be seen in our post How Much Gas Does Trinidad Have? Indeed the main sticking point in the negotiations was the Trinidadian position that Barbados should recognise the 1990 treaty. The UNLOS council held that two countries could not bind a third without it’s consent and hence the 1990 treaty had no impact on Barbados.

The maritime boundaries are currently as seen in the diagram below. The purple line indicates Trinidad’s initial boundary claim and the brown line indicates the claim they put forward to the UNLOS Council. The green line represents the final decision of the UNLOS Council.

The result of the UNLOS is that the 1990 boundary between Venezuela and Trinidad extends into what is (and always was) legally Barbados’ waters.

Venezuela is now seeking to exercise a claim in an area that it has no right to claim. The waters under discussion can ONLY be Venezuelas if you accept that

1. Half of Guyana is actually Venezuela.

2. That two countries (Venezuela and Trinidad) can commit a third and fourth countries (Barbados and Guyana)  to some form of agreement or treaty without consulting them and without their agreement.

In short, the Venezuelan claim is baseless.

Marginal

Other interesting information on this topic.

International Law Environment by Professor Robert Volterra

Venezuela and Bird Island

Details on Aves Island – How Venezuela Controls the Caribbean Sea

Bird Island Again! – Grenada in Maritime Boundary Dispute With Venezuela.

April 13, 2008

Is This Venezuelan Propaganda?

On page 8b of our Sunday Sun paper was a full page ad purporting to be paid for by the Honourable Hamilton Lashley, promoting the Venezuelan PetroCaribe agreement. It’s headlined “Petrocaribe The Way Forward” The ad is extremely well produced in terms of design and writing style, however it just doesn’t seem to be the sort of thing that an opposition parliamentarian would produce. Let’s face it when parliamentarians are in opposition they don’t have alot of money to throw around.

Our position on PetroCaribe is well known a quick search of this site will lead to many articles on what we think of Mr. Chavez’s initiative. In a nutshell we think that Petro Caribe will saddle the countries of the english speaking Caribbean with massive debt and make them subject to the whims of a Venezuelan government that historically has shown itself to be hostile to the region’s best interests.

When we read the ad we felt it read like a Venezuelan press release, so we went looking on the net and….

GUESS WHAT!!!!

IT DOES READ LIKE A VENEZUELAN PRESS RELEASE!!!!

The following paragraph comes from “Hamilton Lashley’s” ad.

“What is Petrocaribe?

Petrocaribe is an Energy Cooperation Agreement proposed by the Bolivarian Government of Venezuela, in order to resolve the imbalances in access to energy resources through a new system of favourable exchange, equity and fairness among the countries in the Caribbean region. “

Now the following is from Bolivarian News Australia which is released by the Venezuelan Embassy there. We’ve put a copy on our server in case the source document should suddenly disappear 😉

“Petrocaribe is an Energy Cooperation Agreement proposed by the Bolivarian Government of Venezuela in order to solve the world’s asymmetries to have access to energy resources, through a new exchange scheme: favorable, equitable, and fair among the countries of the Caribbean region…”

What are they odds of these two articles being written by different people? Probably about the same odds as winning the lottery five times in a row!

Marginal

For Further Reading:

The folly of Petro Caribe

Venezuela and Bird Island

Venezuela and Its Claim of Most of Guyana’s Land

Details on Aves Island – How Venezuela Controls the Caribbean Sea

Bolivarian News Australia 27th December 2007 (on NFTM Server)

April 8, 2008

Somehow We’re Not Convinced!

Filed under: Banking,Barbados,Capitalism,Caribbean,Economy,Globalisation,Media,mergers — notesfromthemargin @ 6:39 pm

Has anyone else noticed how all the major bankers are lining up to tell us how the take over of RBTT by RBC won’t affect competition in the Barbados banking market place? First John Beale and now Oliver Jordan who are both saying the same thing….

PRESIDENT and CEO of RBTT Bank Barbados Limited, John Beale, does not foresee any significant impact on the local banking sector from the recently approved amalgamation between RBTT and the Royal Bank of Canada (RBC).

Speaking to Business Monday, Beale stated I dont think it will have a great impact, I dont think it will affect the competition.

You’ll pardon us but somehow we can’t see that the removal of one of the major banks from a marketplace that verges on an oligopoly won’t affect the competition.

Maybe we’re just cynical but despite the goodly efforts of Mr. Beale and Mr. Jordan we remain rather skeptical.

Marginal

April 7, 2008

Is The Barbados Stock Exchange Becoming Irrelevant? Is it already?

We on the margin were reflecting on the recent conclusion of the Neal & Massey BS&T takeover. Neal & Massey were successful of course in buying the entire company. Some 97% of shareholders willingly took the offer and the remainder were bought out by N&M following the 90% rule. (If you own 90% of a public company you can take possession of the other 10% of shares just by paying for them). So lock stock and barrel, BS&T as an independent entity is history. What was once considered the symbol of white corporate power in Barbados has been sold (but that is another post).

So what happens next? Of course the company will be de-listed from the BSE, it’s now a wholly owned subsidiary so it won’t be traded. As a result the numbers of companies on the exchange take a hit. This will be the latest in a series of reductions in the number of public companies in Barbados. Island Properties Ltd. was taken off the exchange by Colin Brewer & Tony Hoyos, Life of Barbados was taken down by the Mutual (now Sagicor), BWIA was grounded by the Trinidad Government. If we want to think back that far Plantations Ltd. went in a long agonizing slide into oblivion. Now we have BS&T joining the ranks of companies that were once public.

Along with this slow dwindling, there is a scarcity of new companies going on to the exchange. Of course unless you count Sunbeach (we won’t go any further on that one). To make matters worse there’s an overwhelming tendancy for people to buy shares and then hold onto them for long term appreciation. So we have far more buyers than sellers. The mutual funds have added a new dimension but the returns (if you take out the BS&T takeover) have been pretty much moribund.

Merging the regional exchanges will buy time, however the fact of the matter is the investment arena in Barbados is pretty stagnant. If you listen to the rumour mill, the stories floating around about “back room deals” may or may not have substance, but they don’t engender confidence in smaller investors.

The management of the exchange must see the trends, and also must realise that from a long term view, if they do not take action they will be consigned to the same file folder that currently holds BS&T.

Marginal

April 4, 2008

Beachfront Development In Barbados, A Look Into The Future…

Now that the dust has had a chance to settle, we on the margin have been reflecting on the sale of Cheffette Holetown. At $40 Million for the site Cheffette would have taken the offer. How many years of profit is that from the Restaurant? Further that’s enough money that they could build a second restaurant nearby and still have money left over. As a business deal this is fairly straight forward, Cheffette got an offer that was simply too good to turn down and that is that.

From an economic point of view, the Holetown site in condos will contribute more to the economy than it would as Cheffete. Certainly it would be part of the foreign exchange earning sector rather than being a user of foreign exchange. Economically this is good for Barbados as well.

However one of the very few remaining windows to the sea will close when condos go up on the site. Locals will have to go in either at the Holetown Police Station (the old Pizza House restaurant) or go all the way up past Sandy Lane to access the beach. Heading south after that we believe the next opportunity for beach accesss is Paynes Bay.

Now we on the Margin can’t argue with Condos, but we do have a specific issue with beach development. The development of a condo project allows the developer to make his money back quickly, with relatively little risk. A hotel means that the developer takes the business risk and all of the headaches that come with running a hotel. So if you are a developer, a condo is lower risk for a higher return and an extremely quick payback period. This is why hotels are closing for condos, we on the margin doubt that anything the new administration does will change this. (Despite what Mr. Loveridge says)

The other factor at work here is that there’s only so much beach front land in Barbados. The simple law of supply and demand means that prices for land on the coast will skyrocket in the face of huge demand fed from outside of the island. Hence we can hear about $40 million being paid for a relatively small piece of land. Remember all of those little chattel houses in the Garden in St. James? Little gold mines each one of them.

Now because the land costs are skyrocketing developers need to do two things 1. increase the value of each condo unit and 2. increase the number of units on the lot. This means that development along the beach is going to be high value, and is going to maximise the land use (so much for beach access for locals) and further is going to go up and up and up. This results in what we are seeing at Paynes Bay in St. James where the people on the land side of highway one stop seeing the sun around 3.00pm in the afternoon each day.

If you watch the BTA advertisement above it talks about

“…an island that hasn’t been homogenised and supersized and commercialised away from even being Caribbean anymore”

While these words are being said images of high rises next to the beach are being shown.

Ironic isn’t it?

We think that there is a need for a policy intervention by Government that puts the brakes on this form of development. Now this will have to be done with a light touch otherwise we run the risk of killing the goose that laid the golden egg. One possibility is restricting future high rise structures to the land side of the road. We are not saying no to development of the coast, we are simply saying if we continue as we are going now we will end up being one of those islands that no one wants to go to. The economics of it are inexorable.

Now is the time for an enlightened policy response.

Marginal

March 16, 2008

A Further Thought on Air One…. and other investments.

A further thought on the AirOne story…. The airone project represented a significant investment project that would have brought considerable jobs to Barbados (or Jamaica for that matter). Because of the upward movement of oil prices, that project won’t be happening now.  If you talk to people in the legal and financial fields there is a feeling of caution in the investment community. There are a number of projects that are still going ahead as their investors are committed, however there are some that have been put on pause as investors wait to see what will happen with the global economy.

If Airone has been put on hold, it does make u wonder what other projects are being put on pause? With Oil at $113 a barrel, it may be sometime before they get considered again.

Marginal

March 9, 2008

A Glimmer of Hope As Enthusiasm For Petro Caribe Dims….

We on the margin have been waging our own little campaign about the dangers of Hugo Chavez’ Petro Caribe initiative for the Caribbean, we have been very concerned about the apparent ease with which a number of Caribbean countries were stepping into what we saw as a debt trap which would be very difficult to get out of. Barbados and Trinidad have been steadfast in their refusal to join (even with a change of government in the former) now signs are beginning to emerge.

Bahamas Minister of Finance Zhivargo Laing pointed out the obvious in an article in the Bahamas Journal.

Yes it has to be paid back! And in the meantime you are on the hook to a country that has shown itself to have a territorial agenda that works counter to many Caricom states’ welfare.

We have often asked the question on this blog, “What is it that Chavez gets out of Petro Caribe?”  Thankfully it seems that other people are asking the same question.

Marginal

March 7, 2008

BREAKING NEWS: Airone ON HOLD……

tracking a story out of Ireland this morning….

Plans by a number of Irish businessman including Digicel vice-president Leslie Buckley and former rugby international Brendan Mullin to launch a new Caribbean airline later this year have been grounded, the Irish Independent has learned.

It is understood a number of issues have led to the decision, including the recent surge in oil prices and the failure of the Jamaican government to give the airline a licence.

The decision was also taken against the backdrop of the current turmoil in financial markets and the collapse of US consumer confidence.

The original venture, which had been dubbed the “Ryanair of the Caribbean”, was to launch the airline in May 2008 covering the Caribbean as well as flights linking the region to the US and Latin America.

Since then, oil prices have shot up from about the $70 dollar a barrel level to spike close to $106 yesterday.

In addition, concerns about the subprime market in the US have had a significant negative affect on US consumer confidence.

While the decision by the Jamaican government not to give the licence to Airone pending the privatisation of Air Jamaica was taken earlier this year, the company had been looking at an alternative plan for Barbados, but that has also been put on hold.

It had already began recruiting staff for a Barbados base of operations.

Future

Informed sources said yesterday the company is “continuing to assess the situation” in relation to future plans for Airone.

It is understood about $30m (€20.4m) had been raised for the venture. Other business players on board are Ian Burns, the president of Wanderers rugby club, and Peter Delaney, the former director of operations at Guinness Peat Aviation.

Mr Mullin, who left Quinlan Private to set up public and private equity firm Quantum Investment Capital, recently joined NCB’s private wealth division and Quantum has backed into that business as a result.

BJM Nominees and Mr Buckley are the main shareholders in the company, with the remaining 22pc made up of promoters and cash investors.

At the time of the launch last year, the company confirmed it was positioning itself as a low-cost carrier.

“We are here to establish a headquarters and a home from which we will grow to over 25 planes spread over seven bases within the Caribbean and the Americas,” the company said in its business plan.

Airone Ventures was promising fares as low as 80pc below current charges available from competitors flying to Jamaica and other Caribbean destinations.

– Ailish O’Hora Business News Editor

March 5, 2008

Sir Charles Williams on Apes Hill and Agriculture

 

A couple of days ago we were listening to the mid day call in programme and heard Barbadian construction magnate Sir Charles (COW) Williams call in. After he had made his point, the moderator David Ellis took the opportunity to ask him about the progress of his Apes Hill project.

Never one to miss an opportunity for promotion Sir Charles proceeded to wax lyrically about the great success that Apes Hill is becoming. Apparently the sales of lots has been so great it has forced them to accelerate their business plan to keep up with demand.

Then Sir Charles made an insightful point, when Apes Hill was a dairy farm, it employed approximately 12 persons at minimum wage, in its current state of construction it’s employing close to 400 persons (we were driving so we didn’t have the opportunity to write this down so if the numbers are slightly off don’t scream for our scalps) and those 400 are employed at much higher salaries.  One can reasonably assume that as the project completes it will occupy much more than 12 persons.

Now this opens an interesting point, is moving land out of agriculture necessarily a bad thing for society? Obviously there are limits on how much of this you can do but, is society better off with Apes Hill in agriculture or with it in tourism and golf courses? Similar questions could be asked about Royal Westmoreland.

It is unfortunate that there wasn’t an opportunity for this point to be discussed more on the call in programme.

Marginal

Irish Backed Airline Startup Airone/Project Horizon Advertising For Pilots…

The Irish backed airline Airone Ventures is advertising for pilots in this month’s Flight Magazine under the name Project Horizon. We have noted a growing level of chatter about this airline in the aviation forums on the net…

PostPosted: Mon Mar 03, 2008 16:42:09 Post subject: Reply with quote

I still am amazed that this topic is not causing more ‘ripples’ on the website and in the Eastern Caribbean!!
Anyway here is ad from Flight International…I quote:Launching Low Fares in the CaribbeanProject Horizon is an exciting start up low cost airline based in Barbados. As the first Caribbean low fares airline, Project Horizon plans to become a major player in the region developing a number of bases by combining innovative strategies along with the quick roll out of exciting new routes from our home base in beautiful Barbados. Using dependable Boeing aircraft and an experienced team, Project Horizon will provide indisputably low fares, superior reliability, innovative products and services and a distinct choice of non-stop routes. If you would like to be involved in this dynamic environment, we currently have a number of opportunities for flight crew. So what are you waiting for? Launch your career with us!Direct Entry Captains – Ref. 001The successful candidates will have:
ICAO license with current type rating on B737EFIS Aircraft
Current Class 1 Medical
Minimum 4500 hours total, with 1000 hours in command on type
Captains applying for Flight Instructor positions require minimum of 500 hours as instructors on type
Proficiency in English

First Officers – Ref. 002

Requirements:
Type-rated on B737EFIS. Current ICAG. Commercial/IR license
Minimum 2000 hours, total with 500 hours on type
Proficiency in English

We are also seeking suitable candidates for the following positions:

Regulatory Director Ref: 003
Materials Manager ReI: 004
Technical Services Manager Ref: 005
Maintenance Operations Coordinator Ref: 006.
Quality Assurance Inspector Ref: 007
Flight Operations Officer Ref: 006
Crew Planner Ref: 009
Crew Scheduler Ref: 010
Quality & Flight Salety Officer ReI: 011

If you enjoy a challenge, are interested in flying or working with Boeing 737 EFIS aircraft and in joining a dynamic, productive and exciting startup in the Caribbean, please send you curriculum vitae to our recruitment team at pilots@caribbeanjobs.com
To meet our aggressive growth plans, non-type-rated Pilots will be accepted from January 2009.

Flight International 26 February – 3 March 2008

It would seem that the rumours are true.

Also in related news, Barbados has signed an open skies agreement with Canada which will help the island attract more business of this type.

see:

Canada announces Open Skies agreement with Barbados

Marginal

Also

Irish Airline Headquartering in Barbados?

Jamaica Drops The Ball – Irish Competition For LIAT – Coming Soon To Grantley Adams?

Irish Competition For LIAT?

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