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Wednesday, October 23, 2019
CARACAS, Oct 22 2004 (IPS) - Record high oil prices and rising global demand for fossil fuels have created what could be a propitious setting in Latin America for the creation of Petroamerica, a strategic alliance of regional oil companies.
Record high oil prices and rising global demand for fossil fuels have created what could be a propitious setting in Latin America for the creation of Petroamerica, a strategic alliance of regional oil companies proposed by Venezuela that would represent a further step towards regional integration.
During visits to Argentina, Uruguay, Paraguay and Brazil – the four full members of the Mercosur (Southern Common Market) trade bloc – to promote the initiative, Alí Rodríguez, the president of the state-run oil company Petróleos de Venezuela (PDVSA), has underlined that if the region’s oil companies formed an alliance, they would control 11.5 percent of the world’s crude oil reserves, in a "natural market" of 530 million consumers.
"What insurmountable obstacles could stop companies like Petrobras (of Brazil) and PDVSA from forming a partnership, operating jointly and reaping the benefits together?" Rodríguez asked recently at a conference in Rio de Janeiro.
"There are none, really," he said, particularly since both of these companies and the Mexican state-owned oil giant Pemex all operate primarily with heavy crude.
"What substantial and invincible obstacles could stop us from working together in joint ventures?" Rodríguez continued. "We don’t believe there are any."
PDVSA "could buy or establish refineries in the region to promote its products and brands," Venezuelan oil expert Alberto Quirós, a former executive with both PDVSA and the Anglo-Dutch oil giant Shell, told IPS.
For its part, Petrobras will invest 1.1 billion dollars annually over the next half-decade outside Brazil. Of the total, 80 percent is earmarked for exploration and production, and half of it will be spent in Latin America. Petrobras has considerable experience in deep-sea drilling, specifically in the Atlantic Ocean.
For years, PDVSA and Petrobras have been toying with the idea of installing a joint refinery in northeastern Brazil, with a potential market of 27 million consumers. They have been held back by factors like the cost of such an undertaking, estimated at around two billion dollars.
Now PDVSA has started up operations further south, in Argentina, where it opened an office similar to others previously established only in the United States and Europe – the two areas that absorb the bulk of its oil exports. PDVSA owns refineries in both the United States and the EU.
The Venezuelan oil corporation is also encouraging the creation of a state-run energy company in Argentina, Enarsa, an initiative proposed to the Argentine congress by centre-left President Néstor Kirchner.
Argentina, which is normally an energy exporter, recently imported fuel from Venezuela – the world’s fifth largest exporter of oil – for the first time ever, in order to stave off impending shortages of natural gas.
Left-leaning Venezuelan President Hugo Chávez, an avid proponent of Petroamerica, facilitated a food-for-fuel swap, in which Venezuelan diesel and fuel oil was traded for Argentine agricultural products, including beef and cattle. An arrangement was also made for Argentine shipyards to repair and build oil tankers for PDVSA.
Since Venezuela has also joined Bolivia, Chile and Peru as associate members of the Mercosur trade bloc, which was created in 1991, there are some in South America who have begun to speak of an eventual "Petrosur", as opposed to the Petroamerica originally envisioned by Chávez.
The next step taken by PDVSA was entering into negotiations with the Paraguayan state-owned energy company Petropar. As a result, Paraguay will purchase oil and petroleum derivatives from Venezuela at world market prices but with certain financing facilities, similar to those offered by Venezuela and Mexico to smaller neighbour countries in Central America and the Caribbean.
In addition, Paraguayan President Nicanor Duarte Frutos is scheduled to visit Caracas, where he will sign an agreement for the sale of food products like meat and soybeans to Venezuela, Petropar chairman Angel Recalde announced.
Unofficial reports out of Montevideo indicate that Uruguay will very likely enter into a similar arrangement with Venezuela if socialist presidential candidate Tabaré Vázquez wins the upcoming Oct. 31 general elections.
The leftist coalition led by Vázquez, which sees eye-to-eye with the Chávez government on many social issues, is currently leading in the polls by a wide margin.
In the meantime, despite the political differences between their governments, Venezuela and Colombia have agreed to build a cross-border pipeline that will initially be used to transport Colombian natural gas to refineries and petrochemical plants in western Venezuela.
Venezuela shares two kinds of agreements with Central American and Caribbean neighbours that do not produce their own oil, and have been hard hit by the soaring prices on the world market this past year.
One of these is the San Jose Accord, through which both Venezuela and Mexico sell oil to these countries under highly favourable credit conditions.
Nevertheless, with regard to Trinidad and Tobago, which produces and exports oil and gas, Venezuelan Energy Minister Rafael Ramírez said his country is interested in creating a "Petrocaribbean", similar to the "Petrosur" of South America, with agreements on cooperation, trade and joint business ventures.
The motivation behind all of these efforts, as former Venezuelan OPEC (Organisation of Petroleum Exporting Countries) governor Elie Habalián told IPS, is "the need for Venezuela and other energy producers in the region to attend to the energy needs of their Latin American neighbours, so that they can all help one another in developing their markets, promoting integration and overcoming poverty."
Back in 2000, at the first South American Summit, Amado Cervo of the Brazilian Institute of Foreign Relations noted that Latin America had yet to achieve the kind of productive integration seen in Europe, which was initially aimed at strengthening the continent’s coal and steel industries.
He then asked, "Why don’t Petrobras and PDVSA unite?" The answer, according to Habalián, is "perhaps because the creation of what would be the largest oil company in the world would not be convenient for the centres of world power."
CARACAS, Oct 22 2004 (IPS) - Record high oil prices and rising global demand for fossil fuels have created what could be a propitious setting in Latin America for the creation of Petroamerica, a strategic alliance of regional oil companies proposed by Venezuela that would represent a further step towards regional integration.
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