U.S. calls Chavez oil diplomacy "slippery slope"

By Linda Hutchinson-Jafar

PORT OF SPAIN, May 13 (Reuters) - U.S. Energy Secretary Samuel Bodman said on Tuesday that he does not consider Venezuelan President Hugo Chavez's use of oil as a diplomatic tool to be a "healthy thing."

"I think any time you use energy or the presence of energy or the cost of energy as a diplomatic tool, I think that tends to be a slippery slope and you tend to move in the wrong direction," Bodman told reporters after addressing a business group in Trinidad.

Chavez supplies oil to several Caribbean countries through his Petrocaribe initiative, which allows importing countries to finance their purchases at low interest rates and defer some of the payment for as long as 25 years.

Bodman was on a visit to discuss energy cooperation with government leaders in Trinidad and Tobago, which supplies the United States with more than 60 percent of its liquefied natural gas requirements.

He was asked about Chavez's proposal to create a South American organization of natural gas producers, fashioned after the oil-exporting cartel OPEC. The proposal has gained little traction since most LNG sales are based on long-term contracts that cannot be readily adjusted for price movements.

Bodman said the United States would not support or encourage creation of such a cartel.

"We do not encourage the creation of other organizations like OPEC that clearly have an interest in controlling markets and controlling the flow of oil," he said. "Clearly we as the U.S. are not encouraging the development of a similar type of arrangement in LNG." (Editing by Jane Sutton and Christian Wiessner)