01 November 2024

A recent ruling by Trinidad and Tobago’s Supreme Court has granted US energy giant ConocoPhillips the authority to seize payments directed to Venezuela’s state-owned oil company, PDVSA from the cross-border Dragon Gas project.

The court’s decision to uphold earlier rulings marks a critical milestone in ConocoPhillips’ long-standing dispute with Venezuela over expropriated assets.

The ruling, delivered in late September, allows ConocoPhillips to pursue its US$1.3bn claim against PDVSA by appointing a receiver over funds owed to the Venezuelan company through the Dragon Gas field venture, meaning that PDVSA’s revenue under project could now be redirected to ConocoPhillips in partial settlement of an arbitration award.

“The order gives to the claimant a green light to be able to enforce the judgment in Trinidad if they can establish there are assets held by the defendants or there is money which is owed to the defendant by entities in Trinidad and Tobago,” said Judge Frank Seepersad, noting that PDVSA’s past actions—such as relocating its European headquarters from Lisbon to Moscow—raise concerns about potential asset transfers out of reach of creditors.

Despite the ruling’s implications, the Trinidadian government appears undeterred in its commitment to the Dragon Gas project. Earlier, Energy Minister Stuart Young addressed concerns by affirming that the ruling would not derail Trinidad and Tobago’s gas dealings with Venezuela, emphasising the project’s importance to the energy sector.

“The recognition of the International Chamber of Commerce (ICC) award dated 24 April 2018, does not affect the 30-year Exploration and Production Licence for the Dragon gas field which was granted to Trinidad and Tobago (Shell and NGC) in December 2023,” Young stated, further criticising opposition claims that the project’s viability is in jeopardy.

Francisco Monaldi, Director of the Latin American Energy Programme at Rice University’s Baker Institute for Public Policy, also downplayed the impact of the ruling on the Trinidad-Venezuela energy relationship, characterising it as largely strategic leverage for ConocoPhillips in its negotiations with PDVSA.

“It is mostly about a negotiation between ConocoPhillips and PDVSA. They have done this in the past in Curacao and other Dutch Caribbean islands and basically this allows ConocoPhillips to have leverage in the negotiations of payments with PDVSA that has been ongoing,” Monaldi observed.

According to him, the payments to PDVSA from the Dragon field are minimal at this stage, estimated at around US$1mn monthly for social contributions and taxes. The bulk of the project’s revenue generation is expected further down the line, which means immediate disruptions are unlikely.

On the Venezuelan side, officials have expressed optimism about the ongoing development of the Dragon Gas field despite the ruling. Vice President and Energy Minister, Delcy Rodríguez, hailed the arrival of the survey vessel Doña José II to commence technical assessments at the Dragon field.

However, some energy experts remain sceptical about Venezuela’s willingness to move forward with the Dragon Gas project if payments are jeopardised. Anthony Gonzales, former director of international relations at the University of the West Indies, questioned PDVSA’s motivation to continue if payments are not guaranteed.

“I am not clear on the Court’s decision and whether it will apply in this case where Shell, a foreign company, is to make the final investment decision to invest in developing and exploring Venezuela’s Dragon gas. Shell has to pay either PDVSA or the Venezuelan government for that gas,” argued Gonzales, highlighting that there is still some uncertainty about the ruling.

ConocoPhillips’ remains committed to reclaiming billions in expropriated assets. Since Venezuela nationalised ConocoPhillips’ oil projects in 2007, the company has actively pursued compensation through multiple arbitration awards, totalling over US$10bn in damages. The company’s strategy has included various legal actions across multiple jurisdictions, including moves to seize assets in the Caribbean and a high-profile bid to auction shares in PDVSA’s US-based subsidiary, Citgo, to recoup its losses.

The outcome of this case could have lasting implications on how energy companies approach Venezuela and other countries with complex legal and economic landscapes. For now, the leaders of Trinidad and Tobago and Venezuela remain focused on advancing the Dragon Gas project, recognising its potential to fortify the region’s energy security amidst an ever-evolving geopolitical context.

18 October 2024

President Irfaan Ali has unveiled an ambitious social spending programme fuelled by the country’s rapidly growing oil revenues.

In a special session of Parliament, Ali announced several measures aimed at improving the quality of life for Guyanese citizens, including free university education, a one-time cash grant for every household, and a significant increase in the minimum wage.

As the country gears up for general elections next year, the President’s announcements signal a dramatic shift in Guyana’s economic landscape, leveraging its newfound oil wealth. “We have a US$22bn economy now,” said Vice President Bharrat Jagdeo, justifying the scale of the initiatives.

Among the headline announcements was a one-time cash grant of GY$200,000 (nearly US$1,000) for each of the nation’s approximately 264,000 households. Ali emphasised that the grant is aimed at reducing income disparities and ensuring more disposable income for every family.

Vice President Jagdeo also defended the cash injection, stating that after studying the issue, the conclusion was that Guyana’s economy is strong enough to absorb the GY$60bn (US$287.25mn) payout without risking inflationary pressures.

“We wanted to look at tax measures too to help people. But our experiences with tax breaks for the business community and the hope that they would pass on the benefit has not been a great one…so that is why we opted in this case just to give directly [to households],” Jagdeo added, noting that the country’s wealth from oil revenues allowed for such bold actions.

Guyana, once one of South America’s poorest nations, has transformed since ExxonMobil and partners discovered vast oil reserves off its Atlantic coast in 2015. With oil production soaring since late 2019, the government is now in a position to fund large-scale social programmes that were previously unimaginable. The country’s GDP grew by more than 60% in 2022, the highest growth rate globally, according to the International Monetary Fund.

In addition to the cash grant, Ali announced that university education would be made free starting January 2025, restoring a policy that had been discontinued in the 1990s. “Starting from the January 2025 semester, tuition fees will be completely abolished from the University of Guyana,” Ali said, fulfilling a long-standing campaign promise. This will benefit around 11,000 students and cost around GY$8bn (US$38.31mn).

The government also pledged significant support for the elderly and pensioners. President Ali committed GY$10bn (US$47mn) to the National Insurance Scheme (NIS) to assist retirees who have not met the required contributions to qualify for benefits. Noting that the details of the plan will be revealed in the 2025 National Budget, President Ali touted the cash injection as a means of improving the quality of life for the elderly, who have given their lives to building the country.

Further demonstrating the government’s focus on social welfare, Ali announced that every child in the country will receive a GY$10,000 (just under US$50) universal healthcare voucher starting in 2025. This initiative aims to finance a suite of basic health tests and preventative care, particularly for non-communicable diseases. “This universal health voucher will help us as we work to build a healthy, strong and resilient population,” said the President, estimating that around 500,000 people would benefit from the programme, at a cost of GY$5bn (US$24mn).

President Ali also took aim at high energy cost, announcing a plan to reduce electricity costs by 50% by the end of 2025. With government revenue increasing exponentially in recent years, the country’s civil service has been clamouring for pay increases. The Ali Administration have decided to focus on lower income earners, revealing that the minimum wage for public sector employees would be raised from GY$70,000 to GY$100,000 per month (US$350 to US$500). This increase is expected to pump over GY$1bn (US$4.7mn) into the economy. “This is how we build prosperity,” declared Ali.

Despite the widespread praise for these initiatives, some critics have raised concerns. The Working People’s Alliance (WPA), an opposition party, suggested that the one-off cash grant is an election tactic rather than a long-term solution. “This is election gimmickry,” said WPA co-leader David Hinds, calling for structured cash transfers tied to poverty alleviation rather than ad hoc payments. He also advocated for a feasibility study to explore more sustainable cash transfer systems.

Meanwhile, former Finance Minister Winston Jordan questioned how the government would define household for the purposes of the cash grant. Instead, he argued that the Ali Administration should half the payment and distribute it to each adult Guyanese, using identification data from the Guyana Revenue Authority (GRA), NIS and the Guyana Elections Commission’s (GECOM) register.

Vice President Jagdeo responded to criticism, saying the government had already taken significant steps to stabilise electricity and fuel prices, negotiate lower mortgage rates, and subsidise water costs. “We have tackled almost every single component in the four years we have been in office so far, and now this is the latest robust intervention to tackle cost of living,”said Jagdeo.

As Guyana prepares for its upcoming elections, the Ali administration’s promises of cash grants, free education, and social support will be central to the political debate. However, one thing is clear: Guyana’s oil wealth has opened up possibilities for social spending that were once unimaginable, and the country is eager to see how this newfound prosperity will shape its future.

4 October 2024

TotalEnergies and APA Corporation announced a historic US$10.5bn Final Investment Decision (FID) to develop the “GranMorgu” oil field on Suriname’s Block 58.

This landmark project, which marks the nation’s first offshore oil development, is expected to generate significant economic growth and employment for the country.

“This FID is a historic milestone in Suriname’s oil and gas industry. What seemed like a distant dream is becoming a reality,” said Annand Jagesar, CEO of Staatsolie, Suriname’s national oil company, during a press conference.

The GranMorgu development, which includes the Sapakara and Krabdagu oil discoveries, is located 150 km off Suriname’s coast and holds recoverable reserves of over 750mn barrels of oil.

Patrick Pouyanné, Chairman and CEO of TotalEnergies, expressed optimism about the project, noting that “GranMorgu fits with our strategy to accelerate time-to-market and develop low-cost and low-emission oil projects.”

The development, which is the largest investment ever in Suriname, will include a 220,000 barrels-per-day Floating Production Storage and Offloading (FPSO) unit designed with advanced technologies to minimise greenhouse gas emissions, including zero routine flaring and full reinjection of associated gas.

With TotalEnergies’ commitment to fast-track the project, first oil is expected by 2028, providing a much-needed boost to Suriname’s economy. The development plan includes drilling 32 new wells and leveraging cutting-edge technology to ensure operational efficiency and environmental sustainability.

The consortium is expected to be able to produce oil for under US$20 per barrel, even with enforcement of TotalEnergies’ emissions cap of 18 kg of CO2-equivalent per barrel of oil equivalent on new projects.

Suriname’s President, Chandrikapersad Santokhi, hailed the investment as a major milestone for the nation, stating, “Suriname and its people welcome and appreciate this final investment decision…  We consider this a historic and milestone occasion, creating significant opportunities and revenue prospects for Suriname, as well as attracting investors worldwide.”

The President added that the FID reflects Suriname’s commitment to developing its energy sector while adhering to environmental regulations and standards.

TotalEnergies and APA each hold a 50% stake in the project, with Staatsolie having the right to acquire up to a 20% interest by June 2025. Staatsolie CEO Annand Jagesar revealed that the company has already secured a US$175mn payment and are engaged in negotiations with financial institutions to float a bond to raise funds to make a second payment.

The GranMorgu is expected to create more than 6,000 jobs, including 2,000 direct and 4,000 indirect positions, and contribute over US$1bn in local content. Paramaribo will serve as the primary hub for administrative, support, and logistics activities, with the expectation that significant economic benefits will accrue to local communities.

“Our policy, and that will go for any government, is aiming to raise the standard of living for our population,” declared President Santokhi. He underscored the importance of reinvesting revenues into key sectors such as healthcare and infrastructure, emphasising the government’s strategy to leverage the project’s success to uplift the broader population.

In support of Suriname’s social development, TotalEnergies and APA signed a Memorandum of Understanding (MOU) with Suriname’s Health Ministry to fund the rehabilitation of two mother and child hospitals in Paramaribo.

Staatsolie CEO Annand Jagesar emphasised that the project will transform the nation’s economy and raise the standard of living for its citizens. The company estimated that the country’s oil and gas resources could bring in between US$16bn and US$26bn; a massive value when juxtaposed against Suriname’s US$4.34bn GDP.

The announcement of the FID has also garnered attention for its potential impact on the local economy. Suriname’s Finance Minister, Stanley Raghoebarsing, highlighted that at least US$1.5bn will be invested locally over the next three to four years, which will help stabilise the country’s exchange rates.

However, Raghoebarsing warned of the need to manage cash flows carefully to avoid overheating the economy, as experienced by neighbouring Guyana where there has been upward pressure on wages and some initial appreciation of the Guyanese Dollar.

The GranMorgu project is expected to replicate the success of Guyana’s offshore developments, where a consortium led by ExxonMobil has discovered over 11bn barrels of oil and gas resources.

APA’s CEO, John Christmann, echoed this optimism, highlighting that the immense geologic potential in the Atlantic Margin’s deep waters.  “[This] FID is a point of no return, Suriname will never be the same,” declared Christmann to those gathered at the press conference.  

20 September 2024

Tensions are high between the governments of the Dominican Republic and Venezuela following a series of diplomatic disputes, including the latter’s presidential election and the former’s facilitation of a plane seizure.

Relations notably soured when Venezuela unilaterally revoked Brazil’s recognition as Argentina’s diplomatic representative in Venezuela, which the Dominican Republic condemned as a violation of international diplomatic agreements, specifically the Vienna Conventions.

The Dominican government expressed concern over the impact this decision might have on Venezuelan citizens seeking asylum in the Argentine Embassy in Caracas.

The situation worsened following the disputed Venezuelan elections in July 2024, which saw President Nicolás Maduro declared the winner. Many Latin American countries, including the Dominican Republic, questioned the legitimacy of the election and called for an urgent meeting of the Organization of American States (OAS) to review the results.  

“The Bolivarian Republic of Venezuela expresses its firmest rejection of the interference and declarations of a group of right-wing governments, subordinated to Washington and openly committed to the most deafening ideological postulates of international fascism,” said the Venezuelan government in a statement.

“This is a fluid situation, and we will continue to monitor and determine our course of action,” said Dominican President Luis Abinader, who clarified that the Dominican Republic’s stance aimed to ensure Venezuela complies with calls for a vote recount in the presence of international observers.

“The Dominican Republic will never abandon its principles, particularly its commitment to democracy,” Abinader asserted, underscoring the country’s dedication to democratic values.

The diplomatic strain was exacerbated when Venezuelan President Nicolás Maduro demanded the withdrawal of Dominican diplomatic personnel, citing what it called “interventionist actions” by the Dominican Republic. Consequently, the Venezuelan embassy in Santo Domingo and the Dominican embassy in Caracas are no longer operational.

The disagreement has now grown to involve Russia, after the cessation of the arrangement which saw the Russian Ambassador to Venezuela also cover the Dominican Republic, using the Venezuelan Embassy as a base. The Russian government, through a decree signed by Prime Minister Mikhail Mishustin has since approved the establishment of an embassy in the Dominican capital.

A significant flashpoint in these deteriorating relations occurred with the seizure of a plane linked to President Nicolás Maduro in the Dominican Republic by the US, alleging it was illegally purchased and used by Maduro’s government.

Venezuela has accused the Dominican Republic of working along with the US to seize the plane, viewing this incident as part of the broader diplomatic and economic hostilities directed against the country by the Abinader Administration​.

“The Justice Department seized an aircraft we allege was illegally purchased for US$13mn through a shell company and smuggled out of the US for use by Nicolás Maduro and his cronies,” said US Attorney General Merrick Garland in a statement.

It has since been confirmed that the plane was being used by Maduro and his government including for his transportation for peace talks with Guyana in St Vincent earlier this year, as well as for prisoner exchanges with the US on the Grenadine island of Canouan.

“Once again, the authorities of the USA, in a recurring criminal practice that could not be labelled anything but piracy, have illegally seized an aircraft that has been used by the President of the Republic, justifying its action in coercive measures that, illegally and unilaterally, they impose around the world,” said Venezuela.

In another twist, Venezuelan Minister Diosdado Cabello has accused the Dominican Republic of owing US$350mn for past oil transactions. “Pay the US$350mn you owe, so you have the moral standing to talk about the people of Venezuela,” he asserted, adding that President Abinader had acted naively in the plane seizure, assuming that the US would never take action against the Dominican Republic.

Responding to the accusation about oil debt, President Abinader rejected the claims, stating that no oil imports from Venezuela have occurred since his term began in 2020. “No Venezuelan oil imports have been made during my administration,” Abinader emphasised, pointing out that the last significant transaction occurred in 2015, well before his presidency.

Citing Former Minister of Economy Juan Ariel Jiménez, local media have estimated the oil import debt to Venezuela at US$214.3mn, with US$54.3mn related to the PetroCaribe Programme.

With more than 120,000 Venezuelans living in the Dominican Republic and continued suspension of flights between the countries, there is little optimism about a thawing of relations in the near future.

6 September 2024

 Amid recent sales of Caribbean operations by Canadian banks, RBC Financial (Caribbean) Ltd.’s move to reduce its capital by US$200mn is drawing attention. 

Though registered in Trinidad and Tobago, RBC Financial is a wholly owned subsidiary of RBC Holdings (Barbados), whose ultimate parent company is the Royal Bank of Canada (RBC). 

Consequently, the decision to reduce capital by such a significant amount is fuelling speculation that RBC is positioning for an exit of the Caribbean market following the sale of its operations in Jamaica, Suriname and the Eastern Caribbean over recent years, beginning in 2014. 

In its consolidated financial statements for 2023, RBC Financial (Caribbean) reported a stated capital of US$1.77bn for the year ending 31 October 2023. 

 A reduction of US$200mn equates to an 11.2% decrease from the capital reported as of that date. 

In a notice to creditors dated 25 July 2024, RBC Financial detailed that during a board meeting on 25 June 2024, it was proposed that the sole shareholder pass a resolution to reduce the company’s stated capital. 

On 12 July 2024, RBC Financial’s sole shareholder approved a reduction in the bank’s stated capital by US$200mn “for the purpose of making a distribution to the holders of the ordinary shares of RBC Financial on record on the date the capital reduction occurred”. 

Some analysts are interpreting the move and the notice to creditors as a means by which the sum of money could be returned to RBC Financial (Caribbean) Ltd.’s parent company in Canada. 

RBC Financial’s notice to creditors emphasised that the announcement of a capital reduction was merely a formality required by the Companies Act of Barbados. The institution assured that all creditors will be paid.

“This capital reduction does not affect the operations of RBCFCL [RBC Financial Caribbean] and we remain committed to maintaining strong relations with our clients, employees and communities across the Caribbean,” stressed the bank in its notice. However, scepticism remains as memories of RBC’s historical withdrawal from the Caribbean in 1987 linger. 

“Our regulatory capital ratio at year end stood at 27.30%, which is well above regulatory thresholds,” said RBC Financial Caribbean CEO, Darryl White in his January 2024 report. 

Speculation is mounting that RBC Financial may be over-capitalised and plans to return US$200mn to Toronto for better utilisation, given perceived risks in Caribbean lending. The Central Bank of Trinidad and Tobago (CBTT) indicated that capital reductions can be due to reasons like returning surplus capital, simplifying capital structure, or corporate restructuring. 

“Financial institutions may reduce stated capital for a number of reasons. Some reasons include returning surplus capital back to shareholders, simplifying their capital structure to become more efficient, reducing or eliminating paid-up or unpaid shares, cleaning up its balance sheet, and corporate restructuring,” said the Financial Institutions Supervision Department of the CBTT. 

The central bank made it clear that it would not usually get involved in cases where capital reductions do not negatively impact operations of financial entities. 

“In this instance, the company has stated its reason as being for the purpose of making a distribution to its shareholders. In general, the Central Bank would not take issue with a reduction of stated capital where the financial institution is not impacted negatively,” said the CBTT. 

Responding directly to a question from local media in Trinidad and Tobago about whether the reduction in capital foreshadows its departure from the Caribbean, RBC Financial’s Senior Manager, Corporate Communications, Andrew Knowles, asserted that while they appreciated the interest, the bank is “unable to provide any comments at this time”. 

In March 2008, shareholders of RBTT Financial Holdings voted in favour of the proposed US$2.2bn amalgamation of RBTT with a Caribbean subsidiary of RBC marking the start of the Canadian bank’s Trinidad and Tobago operation as we know it today. 

Since then, RBC has sold its operation in Jamaica in 2014 to Sagicor Group Jamaica. In 2015, RBC completed the sale of RBC Royal Bank (Suriname) N.V. to Republic Bank Ltd (RBL). In 2021, RBC secured regulatory approval for the sale of its Eastern Caribbean banking operations to a consortium of regional banks comprised of 1st National Bank of St Lucia, Antigua Commercial Bank, Bank of Dominica, Bank of Montserrat, and The Bank of Nevis. 

This included its branches in Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines, effectively marking its exit from the sub-region, save for Barbados. 

Against the background of recent divestments by Scotiabank and CIBC, two other Canadian banks in the region, the Caribbean will no doubt keenly observe RBC over the coming months. 

2nd August 2024

The governments of Trinidad and Tobago and Venezuela have signed an agreement for the exploration and production of natural gas from the Cocuina-Manakin field.

The 20-year agreement to exploit the field, which extends across the maritime boundary between the two countries, was signed in Venezuela days before the now controversial presidential election in there.

The deal grants a licence to British energy giant bp, and the state-owned National Gas Company of Trinidad and Tobago (NGC) to develop the Venezuelan side of the Cocuina-Manakin field.

Trinidad and Tobago’s Energy Minister, Stuart Young led the country’s delegation to the event, which was attended by several high-ranking Venezuelan officials including President Nicolas Maduro.

“We continue to take monumental steps as you say, Minister Stuart Young, to consolidate a relationship of good neighbourliness and brotherhood which is and should always be a relationship that serves as a model in the world for relations of cooperation and peace, increasingly,” said President Maduro.

teleSur reported that among the documents signed were authorisation for the tax admission of the production of the Cocuina Field of the Deltana platform, agreements on the timeframe for the implementation of the Manakin-Cocuina Field Area Unit, the Approval Act for its functional and governance structure, and the licence for the exploration and exploitation of non-associated gaseous hydrocarbons in the Cocuina Field of the Deltana platform.

“Once again we have shown the world what happens when two fraternal countries work in a way united, in difficult times, stand up for what is right, the sovereign rights of two countries,” said Stuart Young at the signing ceremony held in Caracas and broadcast live on Venezuelan state television.

The field, estimated to contain 1tn cubic feet of gas, is expected to form part of the rejuvenation efforts to increase production in Trinidad and Tobago’s flagging oil and gas sector. The deal follows the July final investment decision (FID) announcement by Shell T&T Ltd, local subsidiary of Shell plc, for the long-awaited Manatee liquefied natural gas (LNG) project.

“The award of the licence would not have been possible without the significant diplomatic efforts by the Government of T&T and its leadership in driving strong collaboration between bp, the National Gas Company and the governments of T&T and Venezuela,” said bpTT President David Campbell who was also present for the signing.

The press release noted that securing the licence is an important milestone which will allow the company to move forward with planning for the development of these significant resources in a bid to bring more gas into the country’s existing gas infrastructure during this decade.

The agreement now means that bpTT has licences and operatorship for both the Manakin and Cocuina gas fields which the company says will simplify the joint development plan from the unitised field.

The deal was also welcomed by acting President of NGC Verlier Quan Vie who called the development “a continuation of efforts to export natural gas from Venezuela to Trinidad and Tobago,” adding that the NGC is excited to work collaboratively with all the parties to progress this and other opportunities for the benefit of the citizenry. 

Local stakeholders have also praised the government for successfully negotiating the deal to allow the development of the gas field.

The Energy Chamber of Trinidad and Tobago congratulated bpTT, NGC and the Rowley Administration for what it sees as a project that can provide significant volumes of natural gas to the LNG and petrochemical sectors and help extend the life of the gas industry and create business and job opportunities in the country.

The Cocuina-Manakin agreement is the second major deal after the Dragon Field deal, which will proceed following a US Treasury Department licence issued in May, allowing the project despite existing energy sanctions on Venezuela.

However, with intense protests ongoing in Venezuela after both Maduro and opposition candidate Edmundo Gonzalez claimed victory in the election, many are looking at the US reaction after the Biden Administration accused President Maduro of election manipulation.

“We are going to take that into account as we map forward where we may head with respect to sanctions toward Venezuela,” said an unnamed US official in an interview with Reuters.

Photo: AP Photo/Lucanus Ollivierre

19th July 2024

Insurance companies in the Caribbean are anxiously assessing what could be as much as US$500mn in losses following the destruction caused by Hurricane Beryl.

The storm, which made history as the earliest category 4 hurricane on record during the Atlantic hurricane season, left a trail of destruction from as far south as Trinidad and Tobago to Texas in the US.

Now that the dust is settling, the claims are rolling into insurance companies by the hundreds.

Noted catastrophe risk modelling company, Karen Clark & Company has estimated that private insurance companies in the Eastern Caribbean (where the tri-island state of Grenada, Carriacou and Petite Martinique and St Vincent and the Grenadines were hard hit) and Jamaica are staring down the barrel of close to US$510mn in losses.

Prior to reaching Jamaica’s shores, the storm also impacted areas of Haiti and the neighbouring Dominican Republic on the island of Hispaniola.

Insurers in the US and Mexico are also expected to face costs of US$2.7bn and US$90mn, respectively.

Speaking to the media after the passage of the hurricane, officials estimated a 95% loss of the housing stock on Petite Martinique and up to 98% in Union Island and Canouan.

“One hundred percent of the persons on Union Island and Canouan have been impacted,” said Elizabeth Riley, Head of the Caribbean Disaster Emergency Management Agency (CDEMA).

While assessments are at an early stage, it is expected that the damage in the Caribbean will run into the hundreds of millions according to regional leaders.

However, given the relatively low rate of home insurance penetration, only a fraction of this will likely fall on the insurance companies. For example, Prime Minister Ralph Gonsalves of St Vincent and the Grenadines reported that only 79 of the 1,300 houses on Union Island have insurance, and a total of 346 out of close to 6,000 on all the Grenadine islands.

Unfortunately, the average homeowner in many Caribbean countries only acquires home insurance to meet the requirement for a mortgage. Since a significant proportion of homes are built in stages ‘out of pocket’ and without a mortgage, insurance penetration is often low.

“Just for today, we had 20 claims coming in,” said GK Insurance Claims and Legal Manager, K Michelle Reid in a Jamaica Observer interview days after the passage of Beryl.

Other insurance companies including British Caribbean Insurance Company (BCIC), and IronRock also reported an uptick in claims both for buildings and in some cases for damage to vehicles.

“Once there is a storm there is usually an uptick in insurance interest. Certainly, there were a few instances of people whose policies had expired, and they were getting in touch with us to reinstate them,” said Peter Levy, Managing Director at British Caribbean Insurance Company (BCIC) in a Sunday Finance interview.

He also believes that what happened with Hurricane Beryl is that the notice was such that there was only one working day for people to get the coverage they needed, thereby causing many to remain uninsured as the storm made landfall in Jamaica.

With insurance premiums across the region already on the increase since the beginning of the year due to spiralling reinsurance costs, there are fears that Hurricane Beryl and future storms this season could push those premiums even higher.

Some analysts have also blamed higher interest rates in the Caribbean and across the world for the increase in insurance premiums. Investing in insurance companies is now less attractive since it is now relatively easier now for investors to earn higher returns on other securities.

With global inflation slowing and central banks signalling likely interest rate reductions, insurance companies are hoping that investors return to the market.

“So far, we have our fingers crossed, we’re hoping that this isn’t the event that pushes rates up further, but we will wait to hear. And of course, the sobering thing is, we’re only at the start of the hurricane season, with the forecast being predicted for a record amount of storms,” lamented Bruce Ferguson, President of the Bahamas Insurance Brokers Association.

“Obviously, the Caribbean insurers have taken a hit on the Caribbean islands… It was moving fast, which is often a good thing,” said Ferguson, making reference to slow-moving Hurricane Dorian which devasted The Bahamas over a prolonged period.

In 2022, President of the General Insurance Association of Barbados (GIAB), Randy Graham reported that an estimated US$55bn in claims was paid out by reinsurance companies for damage caused by hurricanes in that year, ultimately driving up insurance premiums. With a possible price tag of US$500mn for insurance companies from Hurricane Beryl alone, it is expected that they would turn to their reinsurers to cushion the blow.

Both categories of insurers now wait with bated breath to see what costs will come during the remainder of the hurricane season.

Photo: AP Photo/Lucanus Ollivierre

5th July 2024

Countries across the region are reeling from the effects of Hurricane Beryl, a Category 5 storm which swept across the South Eastern Caribbean to Jamaica and Cayman leaving over seven dead and thousands homeless.

The storm was unprecedented both in term of the speed with which it intensified from a tropical storm to a hurricane, and how early in the year it came.   Hurricane Beryl was the first Category 5 storm to hit the Caribbean this early in the year in over 100 years of records with scientists attributing the very fast intensification and early date of the storm, to the record high temperature of surface waters – reaching 30 degrees centigrade, well over the normal threshold of 27 degrees which provokes hurricane formation.

After hitting Barbados on 1st July with high winds and storm surge, the hurricane continued its path, causing further damage in Dominica and Saint Lucia and then increased in strength to a Category 5 storm where it was most destructive to islands in St Vincent and the Grenadines and Grenada.   The storm’s intensity then diminished to a Category 4, and as it glanced off the South Coast of Jamaica and to the South of the Cayman Islands, the level of damage and destruction was mercifully less severe than was initially feared.  There was still widespread damage to buildings, fallen trees, storm surges resulting in flooding, power outages and disruption to water supplies and telecommunications.  60% of customers were without electricity in Jamaica at one point.

The most severe devastation has been recorded in Grenada’ sister islands of Carriacou and Petite Martinique, and the Grenadine islands of Union, Bequia and Canouan with 90% of the housing stock damaged in the most affected islands

Carriacou and Petit Martinique suffered between 70% and 97% of buildings damaged, respectively, and severe agricultural destruction.  Satellite images from the Copernicus damage assessment highlight the widespread devastation. In Grenada itself, the northern parishes of St. Patrick, St. David, and St. Andrew experienced significant housing and agricultural losses.

Describing the destruction on Carriacou, Grenada PM Dickon Mitchell said  “Having seen it myself, there is really nothing that could prepare you to see this level of destruction. It is almost Armageddon-like. Almost total damage or destruction of all buildings, whether they be public buildings, homes or private facilities. Complete devastation and destruction of agriculture, complete and total destruction of the natural environment. There is literally no vegetation left anywhere on the island of Carriacou.”

In St Vincent and the Grenadine’s Union Island, critical infrastructure such as schools and hospitals were destroyed, leaving residents without essential services like electricity, water, and communication. The destruction of rainwater harvesting systems has exacerbated the humanitarian crisis, leaving many vulnerable to health risks.   The airport terminal and power plant on Union Island is reportedly extensively damaged.  On Canouan, almost all buildings sustained damage, with roofs ripped off and severe shortages of water and electricity.  The full extent of damage in Canouan and Mayreau is still not known due to telecoms outages.

Regional disaster response mechanism, CDEMA, has already deployed several teams to the affected islands together with the National Emergency Management Coordinators, the UN Emergency Technical Team (UNETT) and the private sector.

The UN Secretary-General, António Guterres, reiterated his solidarity with countries affected by hurricane Beryl, releasing $4 million from the UN Central Emergency Response Fund to Grenada, Saint Vincent and the Grenadines, and Jamaica. The European Union has approved US$486,600 in humanitarian aid for SVG and Grenada.

In the aftermath of the hurricane however, leaders of the worse affected Caribbean nations expressed their concerns about access to international finance to fund rebuilding and called on richer countries to honour their climate commitments.  Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines said:

“For the major emitters of greenhouse gases, those who contribute most to global warming, you are getting a lot of talking, but you are not seeing a lot of action – as in making money available to small-island developing states and other vulnerable countries.  I am hopeful that what is happening – and we are quite early in the hurricane season – will alert them to our vulnerabilities, our weaknesses and encourage them to honour the commitments they have made on a range of issues, from the Paris accord to the current time.”

Other countries across CARICOM have been quick to offer support with shipments of emergency supplies and shelter being provided by unaffected Governments and their private sectors in Trinidad and Tobago, Guyana and Antigua and Barbuda among others.

Photo: usatoday.com

4th July 2024

Dear Members and Friends

As you will have followed in the media, Hurricane Beryl has caused widespread damage, destruction, power outages and disruption to water supplies and telecommunications in the South Eastern Caribbean. After hitting Barbados with high winds and storm surge, the hurricane continued its path, causing further damage in Dominica, Saint Lucia, St Vincent and the Grenadines, and more extensively to Grenada.  The most severe devastation have been in Grenada’ sister islands of, Carriacou and Petite Martinique,  and the Grenadine islands of Union and Bequia. 

The impact on Jamaica has been less severe than feared, however some parishes,  Manchester and St Elizabeth have suffered serious damage.   

We wait to hear the read-out this morning from the Cayman Islands where the storm continues to rage.   It is expected to pass within 50 miles of the South of Cayman and to be over by 4pm UK time.  

The scenes of the devastation across the islands are heartbreaking with many people left homeless, many businesses destroyed, and seven people killed.   Our thoughts and prayers are with all those affected and their families. 

At the time of writing, the main information we have been able to gather so far is as follows:

Barbados:

The storm caused severe damage to the south coast and significantly affected the fishing industry, with over 200 fishing vessels damaged or destroyed.

Grenada: 

The northern parishes of St. Patrick, St. David, and St. Andrew on Grenada’s main island experienced significant housing and agricultural losses. 

Hurricane Beryl caused extreme damage to Carriacou and Petit Martinique, with 70% and 97% of buildings damaged, respectively, and severe agricultural destruction. Satellite images from the Copernicus damage assessment highlight the widespread devastation. 

Emergency relief items are urgently needed, significantly as water supplies have been disrupted since Sunday and shelter.

St Vincent and the Grenadines: 

Hurricane Beryl caused widespread devastation across St. Vincent and the Grenadines, with Union Island, Canouan and Mayreau bearing the brunt of the impact. 

In Union Island’s Clifton, critical infrastructure such as schools and hospitals were destroyed, leaving residents without essential services like electricity, water, and communication. The destruction of rainwater harvesting systems has exacerbated the humanitarian crisis, leaving many vulnerable to health risks.   The airport terminal and power plant on Union Island is reportedly extensively damaged.  

On Canouan, almost all buildings sustained damage, with roofs ripped off and severe shortages of water and electricity affecting daily life. Essential services like ATMs and supermarkets are closed, forcing residents to seek shelter in compromised locations such as leaking buildings.

Approximately 1,750 people are currently housed in 71 public evacuation centres across the islands, underscoring the urgent need for humanitarian aid. Ongoing assessments are underway. So far it is estimated that 90% of the housing stock is damaged in the most affected islands, with 100% of the people in need.

These communities urgently require tarpaulins, roofing materials, and basic supplies to address immediate needs and ensure safety.

Jamaica: 

Jamaica escaped widespread damage however there are reports of dozens of housing damage, flooded and blocked roadways, fallen trees and landslides however the island.    The main damage to housing and infrastructure was in Manchester and St Elizabeth

HOW TO SUPPORT: 

We will be making donations to each of the following and we hope you will join us in supporting and disseminating the various initiatives to raise funds and collect resources for those affected by Hurricane Beryl. 

Please do consider the following:

GRENADA:

Fund being managed via the High Commissioner of Grenada in the UK: 

https://www.gofundme.com/f/help-rebuild-grenada-carriacou-pm-hurricane-relief-fund?utm_source=copy_link&utm_medium=customer&utm_campaign=man_sharesheet_ft&attribution_id=sl:3bbaca28-8b46-43ed-ac90-4acd9c9283f5

Grenada Red Cross: 

Donate

ST VINCENT AND THE GRENADINES: 

Fund being set up by the Government of St Vincent and the Grenadines: 

https://www.svghurricanerelief.gov.vc/ (will go live in next 24 hours)

SVG Friendship Foundation (UK) (UK registered charity chaired by High Commissioner Cenio Lewis). 

Bank- Lloyds Bank

Sort code – 30-98-97

Account – 61803263

Swift – LOYD GB 21031

If your company are engaged in other initiatives to support those affected and the recovery efforts, please do let us know and we will be very happy to circulate them to our membership and our wider networks. 

With best wishes

Chris and the Team at The Caribbean Council

Photo reference: Grenada