Texaco Accused of Blackmailing Honduras

Texaco has artificially created oil shortages in Honduras as a means of coercing the government to increase prices of gasoline, officials of the outgoing Honduran government claimed in late January.

Thousands of Honduran consumers waited in line to buy gasoline during the most recent of several shortages over the past year, on January 20-21. "This situation has arisen," said Honduran economy minister Ruben Mondragon, now out of office, "because Texaco is pressing our government to gain a 207% increase in the price of gasoline. Logically, we are not prepared to authorize it."

Texaco blamed the brief shortage on a delay by the government in approving the transfer of foreign exchange necessary to buy a shipment of oil from Saudi Arabia. Honduras' Central Bank, however, maintained that the transfer was authorized in time to avert the shortage, which ended when tankers eventually arrived at Texaco's Puerto Cortes refinery.

The Honduran economy is deeply dependent on Texaco. Honduras produces no oil, and Texaco handles all of the nation's imports, owns the only refinery in the country, and dominates distribution of petroleum products from the refinery. Texaco distributes 33.8% of petroleum products such as gasoline, industrial fuel, and kerosene; Exxon 28.7%; and Shell 17.2%, with the remainder in the hands of Honduran firms.

Texaco's refinery, at Puerto Cortes, has a capacity of four million barrels a year-slightly less than current Honduran consumption. The company, however, has not refined any petroleum at Puerto Cortes since September because "it is uneconomical to do so," says Texaco spokesperson Mike Malcolmson. Malcolmson blames a government-imposed excise tax on all crude oil imports for making it impossible to sell the refined product at a satisfactory profit. Currently, Texaco imports refined oil from Trinidad and Saudi Arabia.

The company has offered to sell the 15 year old refinery to the Honduran government for $50 million; the government has offered $10 million. "You could almost buy a new refinery for the price they want," said an official at the Honduran embassy in Washington.

The new Honduran government of president Roberto Suazo Cordova, inaugurated on January 27, has made no statements concerning whether it will continue to negotiate with Texaco or seek other sources to meet the country's energy needs.