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South America united on energy

By Tessa Marsman
CARACAS 04 23 07

The First South American Energy Summit (FSAES) held in Margarita (Venezuela) just after the weekend succeeded not only in bringing together all South American countries but also in advancing existing energy agreements like an oil exchange between Ecuador and Venezuela and the full cooperation of Colombia in the construction of a poliduct that facilitates Venezuela’s oil export throughout the world.

And these are just some of the energy agreements that were brought together in these past two days in the Venezuelan tourist island.

The youngest project on energy was signed only five moths ago. It is the so called «OPEC of gas», the Oppegasur, unifying the gas producing countries Argentina, Bolivia and Venezuela.

The 55 million dollars project (in the first stage) follows energy initiatives like the agreement on gas exchange between Venezuela and Colombia and a gas pipeline to the south, connecting Venezuela, Brazil, Bolivia and Argentina.

Additionally political economical organizations like Mercosur (Argentina, Basil, Paraguay, Uruguay and Venezuela) and Andean Nations Comunity, CAN, (Chile, Bolivia, Colombia, Ecuador and Peru), were mentioned to incorporate into one Latin American agreement.

The goal of bringing all these agreements together is not only to make more profit but also to preserve it.

In order to prevent foreign countries to take energy out of the country without offering sufficient compensation, the South American countries, also united in the Comunidad Suramericana de Naciones (CSN) discussed a collective effort to raise knowledge, to improve infrastructure between the countries and to harmonize laws. Seven of the twelve countries are governed by socialist presidents.

National Oil companies like Petrosur, Petrocaribe, Petroandina, Petroamérica and Petrolera del Cono Sur gave their compromise to these goals.

An issue discussed because of its importance in the unification of the Latin American countries, was the realization of the Bank of the South. The issue was not officially on the agenda of the energy summit.

The creation of this bank will be initiated in June this year by Argentina and Venezuela. It must take over the role of World Bank and the International Monetary Fund in providing funds to Latin American Governments and ultimately lead to a latin american bank and one currency.

On this first Summit, Brazil, that is not part of the Bank yet, said that it did no longer oppose against the idea of a Latin American Monetary Fund, but that it wants to know how it will be organized before taking part. It prefers however to be part of the process of establishment instead of integrating at a later stage.

In one month a reunion of technical financial teams will take in Brasil in order to revise the construction of the Bank of the South,

The smaller and economically weaker country Ecuador also showed interest in participating in the Bank.

«This way we will close the debts we have with the World Bank and the IMF», said Rafael Correa, president of Ecuador. «The Bank of the South will be a South American Bank owned by governments and the states of this region as part of a financial integration and cooperation», he added.

To Colombia and further

More, important extensions of existing agreements were made by neighboring countries Colombia and Venezuela.

Uribe Vélez, the president of Colombia, confirmed his full support to the construction of the poliduct between Maracaibo and the Colombian pacific, which permits Venezuela to subtract crude oil destined for the Asiatic market unhampered. The poliduct is an addition to the gas pipeline from Punto Ballens in La Goajira, Colombia to Maracaibo, Venezuela.

Political relations between Venezuela and Colombia are not always stable, economically however the two countries generally get along.

The pipe line is supposed to transport 150 millions meters cubic per day until Venezuela recovers its gas supply and will provide Colombia with 500 million meters cubic. An amount of 365 million dollars will be invested «in the project that will be extended up till Panama and the rest of Middle America», confirmed the Colombian president.

The Venezuelan president Hugo Chávez responded that «now Venezuela retrieved of the CAN and with still some years to maintain border agreements and in commerce, we have discussed the speed up op commercial bilateral agreements».

He added that they would help to construct a refinery in the route of the poliduct, in Colombian territory in exchange. Furthermore he proposed Ecopatrol, the Colombian national oil company «to exploit the Faja del Orinoco».

The «Faja de Orinoco» is an oil pit which was long considered worthless for the crudeness of its oil. For a year however exploitation has stepped up drastically with the discovery of a new refinery technique. The Faja is considered the largest oil reserve in the world.

More oil exchange

Besides Colombia, Venezuela agreed to exchange oil with Ecuador. The neighbour of Colombia extended a deal with Venezuela already done in February this year.

«We could help Venezuela to extract Ecuadorian gasoline and Venezuela could do the same for Ecuador in the Faja del Orinoco», declared Alberto Acosta the Ecuadorian minister of energy, mines and gasoline.

The statement of Acosta this Tuesday was an affirmation of a buy-sale deal of gasoline between Pdvsa and Petróleos del Ecuador (Petroecuador). The deal contains gas supply of Petroecuador during the period of one year to Pdvsa with monthly adjustments in volume up till 100 thousand barrels a day. Pdvsa set its eye on the oil field in Ishpingo- Tambococha- Tipurini (ITT) in the east of Ecuador.

In return, the Venezuelan state company will supply the same amount of refined oil to Ecuador. Petroecuador will both get the rights to exploit a part of the Faja del Orinoco in cooperation with Pdvsa, and the construction of a refinery will be investigated, according to the minister of energy and mines Rafael Ramírez.

Relations between Ecuador and Venezuela have been very well since November 2006 when the socialist Rafael Correa won the presidential elections in Ecuador.

Oil was not the only hydrocarbon Ecuador wants to share. «We have gas and we need gas, therefore we need to be complementary», said the Ecuadorian minister of Energy and Mines, Alberto Acosta as an argument to enter the Oppegasur.

«To integrate the countries that demand gas is not only at the defense of the prises but also improves the market condition to generate a joint politics between the southern nations», he said.

The Ecuadorian minister explained that the country has very little gas which is the reason of negotiations with the Peruvian government. Furthermore the countries negotiate an interconnection of gas between the two nations.

«We spoke with Petroperú, with who there will be cooperation in the delivery of products. We spoke about Oppegasur, because Peru has one of the most important gas reserves in the world», he said.

Other agreements made on the summit are the evaluation by Venezuela of the possibility to construct a refinery in Villa Elise, Paraguay. To Bolivia Venezuela promised to raise the amount of gasoline send to the country to 250 thousand barrels per month.

The first Energy Summit was formalized under the name Unión Americana del Sur (Unasur) with a headquarter in Quito, Ecuador.

ABN 04 20 07

Copyright© 2007 ABN.All Rights Reserved.



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