Inter Press Service » Integration and Development Brazilian-style http://www.ipsnews.net Turning the World Downside Up Fri, 03 Jul 2015 21:48:45 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.5 Sustainable Use of Biodiversity Could Fill Gap When Belo Monte Dam Is Finishedhttp://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/?utm_source=rss&utm_medium=rss&utm_campaign=sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished http://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/#comments Fri, 03 Jul 2015 15:20:00 +0000 Mario Osava http://www.ipsnews.net/?p=141408 http://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/feed/ 0 Panama and Nicaragua – Two Canals, One Shared Dreamhttp://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/?utm_source=rss&utm_medium=rss&utm_campaign=panama-and-nicaragua-two-canals-one-shared-dream http://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/#comments Wed, 01 Jul 2015 23:31:54 +0000 Iralis Fragiel http://www.ipsnews.net/?p=141388 http://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/feed/ 0 Fracking Expands Under the Radar on Mexican Landshttp://www.ipsnews.net/2015/06/fracking-expands-under-the-radar-on-mexican-lands/?utm_source=rss&utm_medium=rss&utm_campaign=fracking-expands-under-the-radar-on-mexican-lands http://www.ipsnews.net/2015/06/fracking-expands-under-the-radar-on-mexican-lands/#comments Fri, 26 Jun 2015 07:31:38 +0000 Emilio Godoy http://www.ipsnews.net/?p=141313 A Pemex gas distribution terminal. Shale gas will account for an estimated 45 percent of Mexico’s natural gas output by 2026. Credit: Pemex

A Pemex gas distribution terminal. Shale gas will account for an estimated 45 percent of Mexico’s natural gas output by 2026. Credit: Pemex

By Emilio Godoy
MEXICO CITY, Jun 26 2015 (IPS)

“People don’t know what ‘fracking’ is and there is little concern about the issue because it’s not visible yet,” said Gabino Vicente, a delegate of one of the municipalities in southern Mexico where exploration for unconventional gas is forging ahead.

Vicente is a local representative of the community of Santa Úrsula in the municipality of San Juan Bautista Tuxtepec, some 450 km south of Mexico City in the state of Oaxaca, where – he told IPS – “fracking is sort of a hidden issue; there’s a great lack of information about it.”

Tuxtepec, population 155,000, and another Oaxaca municipality, Loma Bonita, form part of the project Papaloapan B with seven municipalities in the neighbouring state of Veracruz. The shale gas and oil exploration project was launched by Mexico’s state oil company, Pemex, in 2011.

Papaloapan B, backed by the governmental National Hydrocarbons Commission (CNH), covers 12,805 square kilometres and is seeking to tap into shale gas reserves estimated at between 166 and 379 billion barrels of oil equivalent.

The project will involve 24 geological studies and the exploratory drilling of 120 wells, for a total investment of 680 million dollars.

But people in Tuxtepec have not been informed about the project. “We don’t know a thing about it,” said Vicente, whose rural community has a population of 1,000. “Normally, companies do not provide information to the local communities; they arrange things in secret or with some owners of land by means of deceit, taking advantage of the lack of money in the area.”

Shale, a common type of sedimentary rock made up largely of compacted silt and clay, is an unconventional source of natural gas. The gas trapped in shale formations is recovered by hydraulic fracturing or fracking.

Fracking involves the massive pumping of water, chemicals and sand at high pressure into the well, a technique that opens and extends fractures in the shale rock deep below the surface, to release the natural gas on a massive scale.

The process generates large amounts of waste liquids containing dissolved chemicals and other pollutants that require treatment before disposal, environmental organisations like Greenpeace warn.

The U.S. Energy Information Administration (EIA) puts Mexico in sixth place in the world for technically recoverable shale gas, behind China, Argentina, Algeria, the United States and Canada, based on the analysis of 137 deposits in 42 countries. And Mexico is in eighth position for technically recoverable shale oil reserves.

A map of the areas of current or future fracking activity in Mexico, which local communities say they have no information about. Credit: Courtesy of Cartocrítica

A map of the areas of current or future fracking activity in Mexico, which local communities say they have no information about. Credit: Courtesy of Cartocrítica

Fracking is quietly expanding in Mexico, unregulated and shrouded in opacity, according to the non-governmental Cartocrítica, which says at least 924 wells have been drilled in six of the country’s 32 states – including 349 in Veracruz.

But in 2010 the study “Proyecto Aceite (petróleo) Terciario del Golfo. Primera revisión y recomendaciones” by Mexico’s energy ministry and the CNH put the number of wells drilled using the fracking technique at 1,323 in Veracruz and the neighbouring state of Puebla alone.

In the northeastern state of Tamaulipas, where 100 wells have been drilled, Ruth Roux, director of the Social Research Centre of the public Autonomous University of Tamaulipas, found that farmers who have leased out land for fracking knew nothing about the technique or its effects.

“The first difficulty is that there is no information about where there are wells,” Roux told IPS. “Farmers are upset because they were not informed about what would happen to their land; they’re starting to see things changing around them, and they don’t know what shale gas or fracking are.”

While producing the study “Diagnosis and analysis of the social impact of the exploration and exploitation of shale gas/oil related to culture, legality, public services, and the participation of social actors in the states of Coahuila, Nuevo León and Tamaulipas”, Roux and her team interviewed five sorghum farmers and two local representatives from four municipalities in Tamaulipas.

The researcher said the preliminary findings reflected that locals felt a sense of abandonment, lack of respect, lack of information, and uncertainty. There are 443 homes near the 42 wells drilled in the four municipalities.

The industry sees the development of shale gas as strategically necessary to keep up production levels, which in April stood at 6.2 billion cubic feet per day.

But according to Pemex figures from January 2014, proven reserves of conventional gas amounted to just over 16 trillion cubic feet, while shale gas reserves are projected to be 141 trillion cubic feet.

By 2026, according to Pemex projections, the country will be producing 11 billion cubic feet of gas, 45 percent of which would come from unconventional deposits.

The company has identified five basins rich in shale gas in 11 states.

For the second half of the year, the CNH is preparing the tender for unconventional fossil fuel exploitation, as part of the implementation of the energy reform whose legal framework was enacted in August 2014, opening up electricity generation and sales, as well as oil and gas extraction, refining, distribution and retailing, to participation by the domestic and foreign private sectors.

The historic energy industry reform of December 2013 includes nine new laws and the amendment of another 12.

The new law on fossil fuels leaves landowners no option but to reach agreement with PEMEX or the private licensed operators over the occupation of their land, or accept a court ruling if no agreement is reached.

Vicente said the law makes it difficult for communities to refuse. “We are worried that fracking will affect the water supply, because of the quantity of water required and the contamination by the chemical products used. When we finally realise what the project entails, it’ll be a little too late,” he said.

Local residents of Tuxtepec, who depend for a living on the production of sugar cane, rubber and corn, as well as livestock, fishing and trade, know what it is to fight energy industry projects. In 2011 they managed to halt a private company’s construction of the small Cerro de Oro hydroelectric dam that would have generated 14.5 MW.

The formula: community organisation. “We’re organising again,” the local representative said. “What has happened in other states can be reproduced here.”

Papaloapan B forms part of the Veracruz Basin Integral Project, which would exploit the shale gas reserves in 51 municipalities in the state of Veracruz.

Pemex has already drilled a few wells on the outer edges of Tuxtepec. But there is no data available.

Farmers in Tamaulipas, meanwhile, “complain that their land fills up with water” after fracking operations, and that “the land isn’t producing like before,” said Roux, who added that exploration for shale gas is “a source of conflict…that generates violence.”

The expert and her team of researchers have extended their study to the northern states of Nuevo León and Coahuila, where 182 and 47 wells have been drilled, respectively.

Each well requires nine to 29 million litres of water. And fracking uses 750 different chemicals, a number of which are harmful to health and the environment, according to environmental and academic organisations in the United States.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Amazon Dam also Brings Health Infrastructure for Local Populationhttp://www.ipsnews.net/2015/06/amazon-dam-also-brings-health-infrastructure-for-local-population/?utm_source=rss&utm_medium=rss&utm_campaign=amazon-dam-also-brings-health-infrastructure-for-local-population http://www.ipsnews.net/2015/06/amazon-dam-also-brings-health-infrastructure-for-local-population/#comments Fri, 19 Jun 2015 20:16:40 +0000 Mario Osava http://www.ipsnews.net/?p=141223 The new General Hospital in Altamira, which has not yet opened, will be the most modern facility of its kind in this city in Brazil’s Amazon rainforest, receiving the most serious cases from the 11 municipalities affected by the construction of the giant Belo Monte hydroelectric dam. Credit: Mario Osava/IPS

The new General Hospital in Altamira, which has not yet opened, will be the most modern facility of its kind in this city in Brazil’s Amazon rainforest, receiving the most serious cases from the 11 municipalities affected by the construction of the giant Belo Monte hydroelectric dam. Credit: Mario Osava/IPS

By Mario Osava
ALTAMIRA, Brazil, Jun 19 2015 (IPS)

Extensive public health infrastructure and the eradication of malaria will be the most important legacy of the construction of the Belo Monte hydropower dam in Brazil’s Amazon jungle for the population affected by the megaproject.

In the six municipalities in the area of the dam, where an action plan to curb malaria has been implemented, the number of cases plunged nearly 96 percent between 2011 and 2015: from 3,298 in the period January to March 2011, just before construction began, to 141 in the same period this year.

Two municipalities have had no cases this year as of May, said Dr. José Ladislau, health manager for Norte Energía, the consortium of private companies and public enterprises that won the concession to build and run Belo Monte for 35 years.

“For the past two years no one has fallen ill with malaria in Brasil Novo – that’s the best news,” said Noedson Carvalho, health secretary of that municipality which is located 45 km from the Xingú river, where the giant hydroelectric dam with a capacity to generate 11,233 MW is being built.

Malaria, which is endemic in the Amazon, is a major factor in rural poverty, Ladislau told IPS. And the Xingú river basin used to have one of the highest malaria rates in the country.

The number of cases has plummeted throughout most of the northern state of Pará, where the lower and middle stretches of the Xingú river run, thanks to mass distribution of insecticide-treated mosquito nets and early diagnosis and treatment.

The results in the vicinity of Belo Monte, where the rural population is highly vulnerable to malaria, were obtained through an 11-million-dollar offensive by Norte Energía which included the construction of laboratories and the purchase of vehicles and long-lasting mosquito nets.

“Belo Monte has given Brasil Novo what it would not have obtained on its own in centuries,” Carvalho told IPS. He mentioned the 42-bed hospital and five basic health units, which now form part of the municipal public health system.

The hospital was already there, but it was private. And due to financial problems, it had shut its doors in April 2014, leaving the 22,000 people of Brasil Novo without a hospital, just when demand was rising due to the influx of workers from other parts of the country, drawn by the Belo Monte construction project.

Sewage runs down one of the main streets of Altamira, even though there is a sewer system. Poor sanitation leaves the city’s children at risk of diarrhea, which is the cause of many admissions to the hospitals in this Amazon rainforest city near the Belo Monte hydropower dam. Credit: Mario Osava/IPS

Sewage runs down one of the main streets of Altamira, even though there is a sewer system. Poor sanitation leaves the city’s children at risk of diarrhea, which is the cause of many admissions to the hospitals in this Amazon rainforest city near the Belo Monte hydropower dam. Credit: Mario Osava/IPS

“There are 30 births a month here, on average; it was a terrible situation to have no hospital in the city,” the municipal health secretary said.

Basic health clinics were also upgraded or installed in the town. But the most serious cases will be sent to Altamira, the biggest city in the area, with a population of 140,000 according to unofficial estimates.

The Brasil Novo municipal government negotiated the purchase and renovation of the hospital, with funds from Norte Energía, through the Regional Sustainable Development Plan (PDRS). It will now be a public hospital catering to the entire population free of charge.

The PDRS, funded by the company, is focused on implementing public policies and local projects.

It comes on top of the Basic Environmental Project (PBA), a set of 117 initiatives and actions to be carried out by the consortium building the Belo Monte dam, as compensation for 11 municipalities affected by the hydropower plant.

The total investment in these projects is 1.2 billion dollars – the biggest contribution to local development by a megaproject in Brazil. The investment, a condition for obtaining the necessary environmental permits, represents 14 percent of the Belo Monte construction project’s total budget.

Three new and three renovated hospitals are the main health infrastructure provided to the 11 municipalities in question.

The biggest one, the Altamira General Hospital, with 104 beds, including 10 in intensive care, is ready to open. It inherited equipment and staff from an old municipal hospital that had 98 beds and will be turned into a maternity and infant care centre.

A new basic health unit in the São Joaquim neighbourhood, where families displaced from areas to be flooded by the Belo Monte dam have recently been resettled. The consortium building the hydropower complex on the Xingú river in the Brazilian Amazon has built 30 of these units in the five municipalities that have been felt the greatest impact from the megaproject. Credit: Mario Osava/IPS

A new basic health unit in the São Joaquim neighbourhood, where families displaced from areas to be flooded by the Belo Monte dam have recently been resettled. The consortium building the hydropower complex on the Xingú river in the Brazilian Amazon has built 30 of these units in the five municipalities that have been felt the greatest impact from the megaproject. Credit: Mario Osava/IPS

The new hospital has fully automated and centralised modern communication, lighting, air conditioning and piped water systems, and extremely strict hygiene with regard to uniforms, staff, waste disposal and sanitation, said Norte Energía’s health manager, Dr. Ladislau.

There has been criticism that the investment did not sufficiently increase hospital capacity, because the number of beds was limited by the size of the existing hospitals that were remodeled or expanded.

But Ladislau said it made no sense to create too big a system, with high maintenance and operating costs that poor municipalities would find it hard to face.

“The idea is to build a strong health network in this region of 11 municipalities…with a focus on primary health care,” and to that end Norte Energía built 30 basic health units, distributed in five municipalities, with seven in Altamira alone, he said.

“With the new health centres, improved sanitation and other preventive measures, the pressure on hospital beds will be reduced,” he said. Some 1,500 children under five are admitted to the Altamira Municipal Hospital annually, most of them for diarrhea – a problem that is avoidable with good sanitation, he pointed out.

The resettlement of families from houses on stilts on lakes and other areas to be flooded by the Belo Monte dam in new neighbourhoods built on high ground will significantly reduce the incidence of diarrhea, he said.

The basic health units installed in those neighbourhoods offer healthcare, dental care, home visits, health promotion and disease prevention, and a system of statistics to put together community health profiles making it possible to plan purchases of medicines, syringes and other supplies, said Ladislau.

The infrastructure provided by Norte Energía will depend on the municipal administration and staff which will provide services, including maintenance.

Brasil Novo is an impoverished municipality that will receive very little in the way of royalties from Belo Monte, and will find it hard to keep the hospital running, the local health secretary Carvalho admitted.

But there will be no shortage of doctors thanks to the central government’s More Doctors programme, which hired thousands of Cuban physicians willing to work in Brazil’s hinterland, and which is also managing to get Brazilian doctors to participate, he said.

But a hospital needs surgeons and other specialists who are more difficult to draw to towns in the Amazon.

There is a risk that hospitals with 32 to 42 beds in Brasil Novo and two other municipalities will be underused, because the local populations range from 15,000 to 25,000 people, and the most serious or complex cases will be referred to the bigger and better equipped hospitals in Altamira.

One illustration of the difficulty in attracting qualified personnel was the attempt to open a medical school on the Altamira campus of the Federal University of Pará, which failed due to the dearth of professors with a doctorate degree.

Local residents also criticise the company for delays in the health projects, which were supposed to get underway earlier in order to meet the increased demand caused by the influx of workers from other regions.

The delays were aggravated by the temporary closure of the health services to build new installations. That happened, for example, in the case of the General Hospital, a large facility that used to be a modest primary health clinic in a poor neighbourhood in Altamira.

“What was already precarious is now even worse,” said Marcelo Salazar, head of the non-governmental Socioenvironmental Institute in Altamira.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Native Communities in Mexico Demand to be Consulted on Wind Farmshttp://www.ipsnews.net/2015/06/native-communities-in-mexico-demand-to-be-consulted-on-wind-farms/?utm_source=rss&utm_medium=rss&utm_campaign=native-communities-in-mexico-demand-to-be-consulted-on-wind-farms http://www.ipsnews.net/2015/06/native-communities-in-mexico-demand-to-be-consulted-on-wind-farms/#comments Wed, 03 Jun 2015 07:32:40 +0000 Emilio Godoy http://www.ipsnews.net/?p=140947 A wind park in the southern Mexican state of Oaxaca, where local communities and indigenous people are fighting the installation of wind turbines in their territory. Credit: Courtesy of the International Service for Peace (SIPAZ)

A wind park in the southern Mexican state of Oaxaca, where local communities and indigenous people are fighting the installation of wind turbines in their territory. Credit: Courtesy of the International Service for Peace (SIPAZ)

By Emilio Godoy
MEXICO CITY, Jun 3 2015 (IPS)

“It hurts us that our land is affected, and the environmental impacts are not even measured. Wind farm projects affect streams and hurt the flora,” said Zapotec Indian Isabel Jiménez, who is taking part in the struggle against the installation of a wind park in southern Mexico.

The 42-year-old healer says the turbines endanger medicinal plants, which are essential for her traditional healing work in the city of Juchitán in the state of Oaxaca, 720 km south of the capital.

“We are right, we know the truth,” Jiménez told IPS. “That’s why we are resisting this, and exercising our rights.”

The Zapotec indigenous woman is one of the leaders of the opposition to the Energía Eólica del Sur (Wind Energy of the South) company’s plans to build a wind park in the area to generate 396 MW that would feed into regional power grids.

Jiménez belongs to the Asamblea Popular del Pueblo Juchiteco – the Juchiteco People’s Assembly – founded in February 2013 to protect the rights of native communities in the face of the introduction of wind farms in their territories.

They are protesting the ecological, social and economic damage caused by wind parks.“They threaten us, they insult us, they spy on us, they block our roads. We don’t want any more wind turbines; they have to respect our territory because it is the last land we have left.” – Isabel Jiménez

In addition, they are complaining about incompliance with International Labour Organisation (ILO) Convention 169 Concerning Indigenous and Tribal Peoples, which requires prior, free and informed consent, and the U.N. Declaration on the Rights of Indigenous Peoples, both of which have been ratified by Mexico.

In November an inter-institutional technical committee made up of delegates of local, state and federal governments began a consultation process with regard to the wind park, and decided to conclude the informative phase in April despite the objections raised by local communities, and move on to the deliberative phase to discuss the viewpoints of the different parties.

Local inhabitants worry that the procedure followed will be used as a model for future projects forming part of the country’s energy reform, whose legal framework was enacted in August 2014, opening up electricity generation and sales, including renewables, as well as oil and gas extraction, refining, distribution and retailing, to participation by the domestic and foreign private sectors.

“The problem is that there has been no consultation process to obtain free, prior and informed consent,” Antonio López, a lawyer with the non-governmental Economic, Social and Cultural Rights Project (PRODESC), told IPS. “They are trying to speed up these processes, and the conditions are created to hold a certain kind of consultation process favourable to the projects.”

PRODESC advises local communities in the area in defence of their rights.

On Apr. 24, Zapotec communities filed a lawsuit in federal court against the consultation process that was carried out. The ruling is expected to be handed down shortly.

Juchitán is located in the Isthmus of Tehuantepec, a windy narrow land bridge between the Atlantic and Pacific oceans in Mexico’s southern state of Oaxaca where a large proportion of the country’s wind energy projects are being developed.

The isthmus, which is 200 km wide, is now home to 21 wind farms, including 12 in Juchitán, according to the Mexican Wind Energy Association.

Renewable energies, not including large hydropower dams, account for seven percent of electricity generation in Mexico. Wind power generates 2,551 MW a year, and the plan is to scale that up to 15,000 MW by 2020.

According to the National Institute of Statistics and Geography, there are 11 million indigenous people, distributed in 54 different communities, in this country of 120 million people. But that figure is considered an underestimate because it only includes people over five who speak a native language.

The Isthmus of Tehuantepec is mainly inhabited by Zapotec, Huave, Zoque, Mixe and Chontal Indians.

“There have been many problems with the application of the consultation process, such as a lack of information and attacks on community leaders and rights defenders,” Andrea Cerami, a lawyer with the defence and public policies section of the non-governmental Mexican Centre for Environmental Law (CEMDA), told IPS.

He said that when a state plans infrastructure works or other projects in native territories without due consultation, it violates the rights of communities, which are protected by international treaties and national laws.

Mexico’s laws on fossil fuels and the power industry, which form part of the country’s energy reform, stipulate that local communities must be consulted. But the law on fossil fuels does not offer a way out for the owners of land, who must reach an agreement with the public or private companies in question or accept an eventual court verdict.

Civil society organisations complain that the planned energy projects would overlap rural indigenous territories – a source of conflict that makes properly conducted consultation processes essential.

Since January, Rarámuri indigenous communities in the northern state of Sinaloa have blocked the construction of a gas pipeline between Sinaloa and the U.S. state of Texas across the border, until a consultation process is carried out to obtain their free, prior and informed consent.

The Yaqui Indians in the northern state of Sonora are likewise fighting the Acueducto Independencia, a pipeline that has carried water from Sonora to the northern city of Hermosillo since March 2013, despite several victories in court by the native communities.

In Oaxaca, Mixe indigenous groups had to go to federal court to see their right to consultation enforced before the National Water Commission, with respect to the use of wells on their land.

“They threaten us, they insult us, they spy on us, they block our roads,” complained Jiménez, who has practiced traditional healing since 1993. “We don’t want any more wind turbines; they have to respect our territory because it is the last land we have left.”

Energía Eólica del Sur has a history of conflicts. Until 2013 the company was named Mareña Renovables, which tried to build a 396 MW wind farm in the town of San Dionisio del Mar, on Oaxaca’s Pacific coast.

But the wind park, with a projected investment of 1.2 billion dollars, including 75 million from the Inter-American Development Bank (IDB), has been stalled since 2013 as a result of court verdicts in favour of the local communities that would have been affected. As a result, Energía Eólica del Sur decided to move to Juchitán.

In December 2012 the international Indian Law Resource Center filed a complaint on behalf of 225 inhabitants of seven indigenous communities with the IDB’s Independent Consultation and Investigation Mechanism (ICIM), regarding the loan.

The complaint seeks damages given the absence of adequate consultation with the communities at the start of the project and the lack of measures in its design and execution aimed at avoiding negative impacts.

In September 2013, the IBD’s Panel of the Compliance Review Phase admitted the complaint. It has been investigating the case since December 2014, in order to draw up a report and proceed to oversee compliance with its provisions.

“This is an opportunity to make sure people are informed in the future,” López said. “We want to give the legal system a chance to respect human rights.”

Cerami, whose organisation, CEMDA, advises the Yaqui Indians in their struggle, said the consultation process helps defuse conflicts.

“Already existing social and environmental conflicts can be exacerbated, and they can escalate in intensity and trigger other kinds of actions,” he said. “The consultation is a mechanism for dialogue that should favour broad participation and help parties with different interests reach understandings.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Growing Mobilisation Against Introduction of Fracking in Spainhttp://www.ipsnews.net/2015/06/growing-mobilisation-against-introduction-of-fracking-in-spain/?utm_source=rss&utm_medium=rss&utm_campaign=growing-mobilisation-against-introduction-of-fracking-in-spain http://www.ipsnews.net/2015/06/growing-mobilisation-against-introduction-of-fracking-in-spain/#comments Tue, 02 Jun 2015 08:01:09 +0000 Ines Benitez http://www.ipsnews.net/?p=140916 Hundreds of demonstrators protest against fracking in Santander, the capital of the northern Spanish region of Cantabria. Credit: Courtesy of Asamblea Contra el Fracking de Cantabria

Hundreds of demonstrators protest against fracking in Santander, the capital of the northern Spanish region of Cantabria. Credit: Courtesy of Asamblea Contra el Fracking de Cantabria

By Inés Benítez
MALAGA, Spain, Jun 2 2015 (IPS)

Thousands of people in Spain have organised to protest the introduction of “fracking” – a controversial technique that involves pumping water, chemicals and sand at high pressure into shale rock to release gas and oil.

“We are all different kinds of people, local inhabitants, who love our land and want to protect its biodiversity,” activist Hipólito Delgado with the Asamblea Antifracking de Las Merindades, a county in the northern province of Burgos, told Tierramérica.

The company BNK España, a subsidiary of Canada’s BNK Petroleum, has applied for permits to drill 12 exploratory wells and is awaiting the environmental impact assessment required by law.

On May 3 some 4,000 people demonstrated in the town of Medina de Pomar in the province of Burgos, demanding that the government refuse permits for exploratory wells because of the numerous threats they claimed that hydraulic fracturing or fracking posed to the environment and health.

While no permit for fracking has been issued yet in Spain, 70 permits for exploration for shale gas have been granted and a further 62 are awaiting authorisation, according to the Ministry of Industry and Energy.

“Thanks to the fight put up by local inhabitants, “a permit for exploration in the northern region of Cantabria was cancelled in February 2014, activist Carmen González, with the Asamblea Contra el Fracking de Cantabria, an anti-fracking group mainly made up of people from rural areas in that region, told Tierramérica.

Critics of fracking say it pollutes underground water supplies with chemicals, releases methane gas – 25 times more potent than carbon dioxide as a greenhouse gas – into the atmosphere, and can cause seismic activity.

“There are more and more negative reports on fracking,” geologist Julio Barea, spokesman for Greenpeace Spain, told Tierramérica. He said that in this country there is “complete social and political opposition to the technique, which no one wants.”

But Minister of Industry and Energy José Manuel Martínez Soria backs the introduction of fracking “as long as certain conditions and general requisites are fulfilled.”

A year ago, 20 political parties, including the main opposition party, the Spanish Socialist Workers Party (PSOE), signed a commitment in the legislature to ban fracking when the government elected in December is sworn in, “because of its irreversible environmental impacts.”

Only four right-wing and centre-right parties, including the governing People’s Party, which is promoting unconventional shale gas development, refrained from signing the accord.

Thousands of protesters took part in a demonstration against fracking on May 3, 2015 in the northern municipality of Medina de Pomar, where 12 permits have been granted for shale gas exploration. Credit: Courtesy of Ecologistas en Acción

Thousands of protesters took part in a demonstration against fracking on May 3, 2015 in the northern municipality of Medina de Pomar, where 12 permits have been granted for shale gas exploration. Credit: Courtesy of Ecologistas en Acción

Fracking involves drilling a vertical well between 1,000 and 5,000 metres deep, down to gas-bearing layers of shale rock. Then the well is extended horizontally up to three km, and between 10,000 and 30,000 cubic metres of water, sand and chemicals are injected at high pressure to fracture the rock and release the oil and gas, which along with the additives is pumped up to the surface.

The companies interested in fracking in Spain downplay the dangers and stress this country’s shale gas potential, especially in Cantabria, the Basque Country and Castilla y León – where Burgos is located – in the north, although exploration permits have also been granted in other regions.

“Like any activity it involves risks, but the technological advances make it possible to minimise them,” said Daniel Alameda, director general of Shale Gas España, a lobbying group for prospectors in Spain.

In an interview with Tierramérica, Alameda said the companies “are totally aware that they have to respect the environment.”

He argued that it is “technically impossible” for fracking to pollute aquifers since the hydraulic fracturing takes place some 3,000 metres below the underground water reserves, and the wells are isolated with a protective barrier of steel and cement.

“It’s a load of eyewash to say fracking doesn’t pollute,” activist Samuel Martín-Sosa, international coordinator at Ecologistas en Acción, told Tierramérica.

He pointed out that a court sentence has already been handed down against fracking, in the U.S. state of Texas, where an oil company was ordered in 2014 to pay damages to a family who suffered numerous health problems because of the proximity of a number of natural gas wells.

Shale Gas España also denies any link between fracking and seismic activity. “We don’t cause earthquakes. We have all of the tools necessary to ensure that the activity does not pose a threat to local residents or to the companies themselves,” Alameda said.

But in a 2014 document, the Geological and Mining Institute of Spain warned that fracking could cause radioactivity in water, pollute aquifers and the atmosphere, and cause earthquakes.

Martín pointed out that most lawsuits never make it to trial because the companies reach out-of-court settlements containing confidentiality clauses that prevent those affected by the wells from speaking out.

The United States is the world’s leading producer of shale oil and gas, followed by Argentina. In July 2011 France became the first country in the world to ban fracking, and 16 other European Union countries have since followed suit, while Spain and 10 others permit the use of hydraulic fracturing, with the United Kingdom in the lead.

Alameda said shale gas would create jobs, reduce energy dependency and improve the country’s trade balance.

Spain imports around 80 percent of the energy it consumes, according to statistics from the 2011-2020 Energy Efficiency and Savings Action Plan. Those involved in the exploitation of unconventional gas estimate that their wells will make the country self-sufficient for 90 years – although that can only be proven through exploration.

But to reduce dependency, “the way forward is not the extraction of gas; we can’t allow the continued burning of fossil fuels,” said Martín-Sosa of Ecologistas en Acción.

The environmentalist criticised “the absolute promotion” of shale gas by the government, when what is needed, he said, is “a change in energy model” starting with the replacement of fossil fuels by renewable energy sources.

But clean energy “faces more hurdles than ever” from the national government, he complained.

Shale Gas España, meanwhile, asserts that “the oil and gas industry is compatible with renewable energies.”

In 2013 and 2014, four of Spain’s 17 “autonomous communities” or regions passed laws banning fracking. But the central government introduced changes in the authority over the development of fracking, which allowed the regional laws to be revoked by the Constitutional Court.

Martín-Sosa said that what is needed is a national ban on fracking, rather than attempts to regulate it.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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A Chimera in Growing Cooperation Between China and Brazilhttp://www.ipsnews.net/2015/05/a-chimera-in-growing-cooperation-between-china-and-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=a-chimera-in-growing-cooperation-between-china-and-brazil http://www.ipsnews.net/2015/05/a-chimera-in-growing-cooperation-between-china-and-brazil/#comments Thu, 21 May 2015 22:31:02 +0000 Mario Osava http://www.ipsnews.net/?p=140757 Chinese Prime Minister Li Keqiang with his host, Brazilian President Dilma Rousseff, during the ceremony for the signing of agreements that ended the Chinese leader’s two-day visit to Brasilia, on May 19. Credit: EBC

Chinese Prime Minister Li Keqiang with his host, Brazilian President Dilma Rousseff, during the ceremony for the signing of agreements that ended the Chinese leader’s two-day visit to Brasilia, on May 19. Credit: EBC

By Mario Osava
RIO DE JANEIRO, May 21 2015 (IPS)

A total of 35 agreements and contracts were signed during Chinese Prime Minister Li Keqiang’s visit to Brazil, as part of the growing ties between the two countries. But there is one project that drew all the attention: the Transcontinental Railway.

The railroad will stretch over 5,000 km from the port of Açú, 300 km northeast of Rio de Janeiro, to a port in Peru. The Peruvian port will be selected after feasibility studies are carried out to determine the viability of specific sites, according to the memorandum of understanding signed by Brazil, China and Peru.

“It’s crazy,” said Newton Rabello, a professor at the Federal University of Rio de Janeiro who specialises in transportation systems. “The 4,000-metre barrier of the Andes mountains and the high costs make the project unviable from the start,” he told IPS.

“Railroads don’t like rugged terrain; all of the ones laid in the Andes mountains were closed down and the so-called bullet train between Rio de Janeiro and São Paulo didn’t work because of the absurd costs,” explained Rabello, an engineer with a PhD from the Massachusetts Institute of Technology (MIT).

He argued that other railways proposed for creating a connection between the Atlantic and Pacific oceans won’t work, for the same reasons – including the ones that cross the areas of greatest economic density such as South America’s Southern Cone region, where the only thing needed is to build stretches to complement already existing railways.

Other accords signed by President Dilma Rousseff and Li, or by some of the 120 businesspersons who accompanied the Chinese leader, are more concrete and opportune for the Brazilian government, which is facing a fiscal adjustment and does not have the resources to carry out necessary infrastructure projects and revive the stagnant economy.

The accords involve a total investment by China of 53 billion dollars – a figure mentioned by the Brazilian government without confirmation from China or a detailed breakdown because it covers initiatives in different stages – some still on paper, such as the interoceanic rail corridor, and others which will go out to bid.

But the participation of Chinese companies and capital will make it possible to jumpstart many infrastructure projects that have been delayed or stalled, such as railroads for the exportation of the soy grown in Brazil’s Midwest and Northeast regions.

A 50 billion dollar fund will be established toward that end by the Industrial and Commercial Bank of China (ICBC) and Brazil’s Caixa Econômica Federal.

Industry, meanwhile, will be the prime focus of the government’s Bilateral Productive Cooperation fund. China will provide 20 to 30 billion dollars and Brazil will later decide what its quota will be.

The industrialisation of Latin America is one aim of China’s development finance, Li said in Brasilia, in response to complaints about the asymmetry of trade relations, with Latin America’s exports practically limited to commodities.

Li’s visit to Brazil represented the first part of his first Latin America tour, which is taking him to Colombia, Peru and Chile until his return home on May 26.

The Ponta da Madeira bridge in Northeast Brazil, which will be connected with iron ore mines by means of a new railroad that will transport the mineral to the ships that set out from this region for China. Credit: Mario Osava/IPS

The Ponta da Madeira bridge in Northeast Brazil, which will be connected with iron ore mines by means of a new railroad that will transport the mineral to the ships that set out from this region for China. Credit: Mario Osava/IPS

The agreements signed in Brasilia for financial cooperation accentuate the much-criticised asymmetry. Chinese banks granted seven billion dollars in new loans to Brazil’s state-owned oil company Petrobras, which come on top of earlier credits that guarantee oil supplies to China.

Another beneficiary of the agreements is Brazil’s mining giant Vale, included in a four billion dollar credit line for the purchase of ships to transport 400,000 tons of iron ore.

Oil and iron ore make up nearly 80 percent of Brazil’s exports to China. Hence China’s interest in improving this country’s transport infrastructure, to reduce the cost of Brazil’s exports, besides providing work for China’s construction companies now that domestic demand is waning.

Another agreement opens up the Chinese market to exports of cattle on the hoof from Brazil.

Brazil has exported some industrial products to China, mainly from the aeronautics industry. The sale of 22 planes from the Empresa Brasileira de Aeronáutica (Embraer) to a Chinese company was finalised during Li’s visit. A prior accord had established the sale of a total of 60.

Bilateral trade amounted to 77.9 billion dollars in 2014, with a trade surplus for Brazil, although it is shrinking due to the fall in commodity prices. The goal is to reach 100 billion dollars in trade in the near future, according to the Chinese prime minister.

The stronger relations, especially the increase in Chinese investment, “could be positive for Brazil, but we have to control our enthusiasm over the closer ties,” said Luis Afonso Lima, president of the Brazilian Society of Transnational Corporations and Economic Globalisation.

“China may have more to gain than us in this process: they are seeking suppliers (of raw materials) throughout Latin America, but without any urgency because their economy has slowed down; they can think things through strategically, with a view to the long term,” the economist told IPS.

“With more experience built up in their ancient culture, they know what they want – they are seeking more global power, and alliances with emerging countries from other regions, like Brazil, expand their influence,” he said.

With nearly four trillion dollars in foreign reserves, they can finance the development of any country, he said.

Meanwhile, Brazil, “which is in an emergency situation and in need of short-term financing, is merely reacting, without any strategy,” he said. “That is why the enthusiasm over Chinese investment worries me; we could end up frustrated, and worse, it could expose us to manipulation, like what happened with Argentina.”

Lima said Brazil had already been frustrated once: when Brazil officially recognised China as a market economy in 2004, offering it better trade conditions, China failed to live up to its commitment of 10 billion dollars in investment in industry in this country.

Another disappointment was the promise to install in Brazil a 12 billion dollar plant by the Chinese company Foxconn, to produce electronic devices. In the end the investment amounted to less than one-tenth of what was promised when the deal was announced in 2011.

But today’s circumstances favour greater economic complementation between the two countries and more balanced bilateral trade.

“China stopped putting a priority on exports and is stimulating domestic consumption, while Brazil is in the opposite situation, with a reduction in internal demand and a greater export effort, which opens up a possibility of synergy between the two countries,” Lima said.

But clear goals are needed to take advantage of this opportunity, he said, “along with long-term planning with clearly defined priorities, the necessary reforms, and productive investment in manufacturing….but the Brazilian government seems to be lost.”

The Transcontinental Railway is designed “to prioritise exports of soy and minerals” to Asia, mainly China, he said.

“Historically railroads led to a major reduction in costs for land transport, replacing draft animals and carts,” said Rabello. “Costs fell from six to one, and even lower in some cases, and that stuck in the minds of people who still see trains as a solution, because they have no idea of today’s costs.”

As a result, several parallel railroads are being built in Brazil, running towards the centre of the country, where agricultural production, especially of soy, is on the rise. Where there was only one precarious railway for carrying exports they now want to offer three or four alternatives, or even more, such as the interoceanic rail corridor, which is “excessive,” the professor said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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“Megaprojects” Can Destroy Reputations in Brazilhttp://www.ipsnews.net/2015/05/megaprojects-can-destroy-reputations-in-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=megaprojects-can-destroy-reputations-in-brazil http://www.ipsnews.net/2015/05/megaprojects-can-destroy-reputations-in-brazil/#comments Mon, 18 May 2015 07:04:00 +0000 Mario Osava http://www.ipsnews.net/?p=140652 Scale model of one of the offshore oil platforms exploiting Brazil’s “presalt” reserves, on exhibit in the research centre of Petrobras, Brazil’s state oil company, in Rio de Janeiro. Credit: Mario Osava/IPS

Scale model of one of the offshore oil platforms exploiting Brazil’s “presalt” reserves, on exhibit in the research centre of Petrobras, Brazil’s state oil company, in Rio de Janeiro. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, May 18 2015 (IPS)

Megaprojects are high-risk bets. They can shore up the government that brought them to fruition, but they can also ruin its image and undermine its power – and in the case of Brazil the balance is leaning dangerously towards the latter.

As the scandal over kickbacks in the state oil company Petrobras, which broke out in 2014, grows, it is hurting the image of former president Luiz Inácio Lula da Silva (2003-2011) and his successor, President Dilma Rousseff, both of whom belong to the left-wing Workers’ Party (PT).

In its 2014 balance sheet, the company wrote off 6.2 billion reais (2.1 billion dollars) due to alleged graft and another 44.6 billion reais for overvalued assets, including refineries.

But the real magnitude of the losses will never be known. The company lost credibility on an international level, its image has been badly stained, and as a result many of its business plans will be stalled or cancelled.

The numbers involved in the corruption scandal are based on testimony from those accused in the operation codenamed “Lava-jato” (Car Wash) and in investigations by the public prosecutor’s office and the federal police, which indicated that the bribes represented an estimated three percent of Petrobras’ contracts with 27 companies between 2004 and 2012.

The biggest losses can be blamed on poor decision-making, bad planning and mismanagement. But the corruption had stronger repercussions among the population and the consequences are still incalculable.

It will also be difficult to gauge the influence that corruption had on administrative blunders, which are also political, and vice versa.

Two-thirds of the devaluation of the assets was concentrated in Petrobras’ two biggest projects, the Abreu e Lima Refinery in the Northeast, which is almost finished, and the Rio de Janeiro Petrochemical Complex (COMPERJ), both of which began to be built when Lula was president.

Petrobras informed investors that COMPERJ, a 21.6-billion-dollar megaproject, abandoned the petrochemical portion of its activities in 2014 as they were considered unprofitable, after three years of waffling, and was downsized to a refinery to process 165,000 barrels a day of oil.

It will be difficult for Petrobras, now under-capitalised, to invest millions of dollars more to finish the refinery, where the company estimates that the work is 82 percent complete. But failing to finish the project would bring much bigger losses.

Thousands of workers laid off, economic and social depression in Itaboraí, where the complex is located, 60 km from the city of Rio de Janeiro, purchased equipment that is no longer needed, which costs millions of dollars a year to store, and suppliers that have gone broke are some of the effects of the modification and delays in the project.

The Santo Antônio hydroelectric plant on the Madeira river, in the northwest Brazilian state of Rondônia, during its construction in 2010. Credit: Mario Osava/IPS

The Santo Antônio hydroelectric plant on the Madeira river, in the northwest Brazilian state of Rondônia, during its construction in 2010. Credit: Mario Osava/IPS

The Petrobras crisis is also a result of the crash in international oil prices and of years of government fuel subsidies that kept prices artificially low to help control inflation.

It also endangers the naval industry, which expanded to address demand from the oil company.

Shipyards may dismiss as many as 40,000 people if the crisis drags on, according to industry statistics.

The industry was revived in Brazil as a result of orders for drills, rigs and other equipment to enable Petrobras to extract the so-called presalt oil reserves that lie below a two-kilometre- thick salt layer under rock and sand, in deep water in the Atlantic ocean.

The Abreu e Lima Refinery, which can process 230,000 barrels a day, has had better luck because the first stage is already complete and it began to operate in late 2014. But the cost was eight times the original estimate.

One of the reasons for that was the projected partnership with Venezuela’s state oil company, PDVSA, which Lula had agreed with that country’s late president, Hugo Chávez (1999-2013).

PDVSA never made good on its commitment to provide 40 percent of the capital needed to build the plant. But the agreement influenced the design and purchase of equipment suited to processing Venezuela’s heavy crude. The project had to be modified along the way.

Plans to build two other big refineries, in the Northeast states of Ceará and Maranhão, were ruled out by Petrobras as non-cost-effective. But that was after nearly 900,000 dollars had already been invested in purchasing and preparing the terrain.

The disaster in the oil industry has stayed in the headlines because of the scandal and the amounts and sectors involved, which include four refineries, dozens of shipyards and major construction companies that provided services to Petrobras and have been accused of paying bribes.

But many other large energy and logistical infrastructure projects have suffered major delays. These megaprojects mushroomed around the country, impelled by the high economic growth during Lula’s eight years in office and incentives from the government’s Growth Acceleration Programme.

Railways, ports, the expansion and paving of roads and highways, power plants of all kinds, and biofuels – all large-scale projects – put to the test the productive capacity of Brazilians, and especially of the country’s construction firms, which also expanded their activities abroad.

The majority of the projects are several years behind schedule. The diversion of the São Francisco river through the construction of over 700 km of canals, aqueducts, tunnels and pipes, and a number of dams, to increase the supply of water in the semi-arid Northeast, was initially to be completed in 2010, at the end of Lula’s second term.

But while the cost has nearly doubled, it is not even clear that the smaller of the two large canals will be operating by the end of this year, as President Rousseff promised.

Private projects, like the Transnordestina and Oeste-Leste railways, also in the Northeast, have dragged on as well.

Resistance from indigenous communities and some environmental authorities, along with labour strikes and protests – which sometimes involved the destruction of equipment, workers’ housing and installations – aggravated the delays caused by mismanagement and other problems.

The wave of megaprojects that began in the past decade was explained by the lack of investment in infrastructure suffered by Brazil, and Latin America in general, during the two “lost decades” – the 1980s and 1990s.

After 1980, oil refineries were not built in Brazil. The success of ethanol as a substitute for gasoline postponed the need. The country became an exporter of gasoline and importer of diesel fuel, until the skyrocketing number of cars and industrial consumption of fuel made an expansion of refinery capacity urgently necessary.

Nor were major hydropower dams built after 1984, when the country’s two largest plants were inaugurated: Itaipú on the border with Paraguay and Tucuruí in the northern Amazon rainforest.

The energy crisis broke out in 2001, when power rationing measures were put in place for eight months, which hurt the government of Fernando Henrique Cardoso (1995-2003).

The return of economic growth during the Lula administration accentuated the deficiencies and the need to make up for lost time. The wishful thinking that sometimes drives developmentalists led to a mushrooming of megaprojects, with the now known consequences, including, probably, the new escalation of corruption.

Not to mention the political impact on the Rousseff administration and the PT and the risk of instability for Latin America’s giant.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Unifying Transmission from North to South Means Cheaper Energy in Chilehttp://www.ipsnews.net/2015/05/unifying-transmission-from-north-to-south-means-cheaper-energy-in-chile/?utm_source=rss&utm_medium=rss&utm_campaign=unifying-transmission-from-north-to-south-means-cheaper-energy-in-chile http://www.ipsnews.net/2015/05/unifying-transmission-from-north-to-south-means-cheaper-energy-in-chile/#comments Thu, 07 May 2015 00:39:52 +0000 Marianela Jarroud http://www.ipsnews.net/?p=140480 The interconnection of Chile’s two major power grids will unite the country in terms of energy and bring down costs in one of the countries in the world with the most expensive electricity. Credit: Ministry of Energy

The interconnection of Chile’s two major power grids will unite the country in terms of energy and bring down costs in one of the countries in the world with the most expensive electricity. Credit: Ministry of Energy

By Marianela Jarroud
SANTIAGO, May 7 2015 (IPS)

Chile expects to have a more efficient and stable electricity market, with a more steady – and above all, less expensive – supply, when the country’s two major power grids are interconnected over a distance of more than 3,000 km.

“It’s not sufficient simply to increase our electricity generating capacity, if we don’t strengthen our transmission capacity at the same time. If we want to be a developed country, we have to aim for diversity in our energy mix and stability in power transmission,” Energy Minister Máximo Pacheco told IPS.

This project “opens up enormous opportunities for progress and stability for Chileans, with cleaner and cheaper energy,” he added.

Chile’s long, thin territory has an installed capacity of approximately 17,000 MW to supply its 17.6 million people and its productive sectors.

In this country power generation and distribution are in the hands of private and mainly foreign corporations, and regulated by the government’s National Energy Commission, which is also coordinating the interconnection.

Of the country’s total installed capacity, the central grid, SIC, accounts for 74 percent and the northern grid, SING, accounts for 25 percent, while the smaller grids in the southern regions of Aysén and Magallanes produce less than one percent.

SING stretches from the region of Arica in the extreme north, bordering Peru and Bolivia, to Antofagasta, while SIC runs from the northern city of Taltal to the Big Island of Chiloé, in the south.

Together they total more than 3,000 km in this South American country, which is 4,270 km long.

The interconnection project, already under construction with a total projected investment of one billion dollars, is being carried out by the French company GDF Suez and involves installing an additional 580 km of transmission lines.

The new power lines will carry energy from the Mejillones power plant in Antofagasta, which forms part of the SING grid, to the Cardones substation in Copiapó, in the northern region of Atacama, which is part of the SIC grid.

Chile currently imports 97 percent of the oil, gas and coal it uses, and its energy mix is made up of 63 percent thermal power, 34 percent hydroelectricity and three percent non-conventional renewable energy (NCRE) sources.

The Italian-Spanish firm Endesa-Enel wants to build a large dam on Lake Neltume, in the town of the same name in the Los Ríos region in southern Chile – a plan that is staunchly opposed by local residents, especially indigenous communities, which defend it as sacred territory. Credit: Marianela Jarroud/IPS

The Italian-Spanish firm Endesa-Enel wants to build a large dam on Lake Neltume, in the town of the same name in the Los Ríos region in southern Chile – a plan that is staunchly opposed by local residents, especially indigenous communities, which defend it as sacred territory. Credit: Marianela Jarroud/IPS

This country’s shortage of energy sources has made the cost of electricity per megawatt/hour (MWh) for industry in Chile one of the highest in Latin America: over 150 dollars, according to the World Economic Forum’s Global Energy Architecture Performance Index Report 2014.

That is the 13th highest cost in the world, and in the region it is only surpassed by the Dominican Republic’s 210 dollars per MWh, and Brazil and El Salvador, where the cost is 160 dollars per MWh.

“Chile has the highest cost of electricity in Latin America, and the power bill went up 30 percent in the last five years,” said Pacheco. “This has a strong impact on our families and hurts the competitiveness of our companies.”

He said the interconnection project, postponed for decades due to technical and technocratic reasons, “is an historic milestone” because it not only makes supply more efficient, stable and steady but also guarantees lower costs and gives a boost to the economy.

According to the National Energy Commission, the interconnection will bring 1.1 billion dollars in benefits to the country because of the drop in power grid costs and prices, linked to greater competition and a reduction of risks in the market.

“This has an enormous value given that it is equivalent to building approximately 35,000 social housing units. That is the magnitude of the economic benefit of this project for the country,” the minister stressed.

In concrete terms, households supplied by the SING northern grid will notice a 13 dollar drop in the price of MWh, while homes covered by the southern grid, SIC will see a three dollar drop.

In the case of industry, there will be an estimated 17 dollar reduction in the price per MWh in the north and nine dollars in the central and southern parts of the country.

In addition, “investment in the energy sector will increase, which will definitely be good news for our country,” Pacheco said.

But the economic benefits are not the only attractive aspect of the project. The minister said “the aim of the connection between the country’s two major grids is that the clean, abundant energy in the north can reach the centre and south.”

This means environmentalists share the government’s optimism.

Manuel Baquedano, director of the non-governmental Political Ecology Institute, told IPS that this is “one of the most important projects for the country” because it entails greater flexibility in energy management and, as a result, lower costs.

The expert pointed out that “the north has a surplus during the daytime” due to the enormous solar power potential in the Atacama desert, the world’s driest, while in the centre and south of the country, served by the SIC, “there is a surplus at night” because of the great hydropower potential.

As a result, he said, “each system can contribute to the other, producing a more stable supply and bolstering the use of NCRE sources, which require back-up energy sources.”

“It’s a key project, because Chile’s problem today is not generation but transmission of energy,” Baquedano said.

In her second term, which began in March 2014, President Michelle Bachelet promised to increase the share of energy produced by NCRE sources to 20 percent by 2025.

“Several of the measures proposed on the government’s agenda are aimed at meeting that goal, such as expanding the power grid, improving competitiveness in energy generation, and making the operation of the power grids more flexible,” the minister said.

He added that the future development of the power grids “will play a central role in facilitating compliance with that target at lower costs, taking advantage of the coordinated use of the transmission corridors.”

“What we are seeing is a proliferation of wind and solar power projects in the north, more than the construction of hydropower dams in the south. The public no longer tolerates megaprojects,” Baquedano said.

Against that backdrop, “I’m not afraid of the interconnection. On the contrary, I believe it is a very important element for the development of NCRE sources,” he concluded.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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The Blue Amazon, Brazil’s New Natural Resources Frontierhttp://www.ipsnews.net/2015/05/the-blue-amazon-brazils-new-natural-resources-frontier/?utm_source=rss&utm_medium=rss&utm_campaign=the-blue-amazon-brazils-new-natural-resources-frontier http://www.ipsnews.net/2015/05/the-blue-amazon-brazils-new-natural-resources-frontier/#comments Sat, 02 May 2015 06:49:52 +0000 Fabiola Ortiz http://www.ipsnews.net/?p=140417 An oil tanker in Rio de Janeiro’s Guanabara Bay. Just 250 km from the coast lie the country’s presalt oil reserves, the wealth of the so-called Blue Amazon. Credit: Fabíola Ortiz/IPS

An oil tanker in Rio de Janeiro’s Guanabara Bay. Just 250 km from the coast lie the country’s presalt oil reserves, the wealth of the so-called Blue Amazon. Credit: Fabíola Ortiz/IPS

By Fabiola Ortiz
RIO DE JANEIRO, May 2 2015 (IPS)

The Atlantic ocean is Brazil’s last frontier to the east. But the full extent of its biodiversity is still unknown, and scientific research and conservation measures are lagging compared to the pace of exploitation of resources such as oil.

The Blue Amazon, as Brazil’s authorities have begun to call this marine area rich in both biodiversity and energy resources, is similar in extension to the country’s rainforest – nearly half the size of the national territory.

And 95 percent of the exports of Latin America’s giant leave from that coast, according to official figures.

Brazil’s continental shelf holds 90 and 77 percent of the country’s proven oil and gas reserves, respectively. But the big challenge is to protect the wealth of the Blue Amazon along 8,500 km of shoreline.

“We haven’t fully grasped just how immense that territory is,” Eurico de Lima Figueiredo, the director of the Strategic Studies Institute at the Fluminense Federal University, told Tierramérica. “To give you an idea, the Blue Amazon is comparable in size to India.”

“But we aren’t prepared to take care of it; it isn’t yet considered a political and economic priority for the country,” the political scientist said.

Figueiredo, who presided over the Brazilian Association of Defence Studies (ABED) from 2008 to 2010, said the Blue Amazon is a term referring to the territories covered by new treaties on international maritime law.

Brazil is one of the 10 countries in the world with the largest continental shelves, in an ocean like the Atlantic which conceals untold natural wealth that offers enormous economic, scientific and technological potential.

According to the United Nations Convention on the Law of the Sea, a country’s Exclusive Economic Zone (EEZ) comprises an area which extends to 200 nautical miles (370 kilometres) off the coast.

Official map of part of the Blue Amazon, off the east coast of Brazil, where conservation and research are lagging behind economic development, mainly by the oil industry. Credit: Government of Brazil

Official map of part of the Blue Amazon, off the east coast of Brazil, where conservation and research are lagging behind economic development, mainly by the oil industry. Credit: Government of Brazil

Brazil’s EEZ was originally 3.5 million sq km. But it later claimed another 963,000 sq km, which according to different national institutions – including scientific bodies – represents the natural extension of the continental shelf.

The U.N. Convention’s Commission on the Limits of the Continental Shelf (CLCS), made up of 148 countries, has so far sided with Brazil, adding 771,000 sq km to its EEZ. The decision on the rest is still pending.

Brazil’s demand, at least with respect to the expansion of the continental shelf granted so far, meets the requisites of the U.N. Convention and grants the country the power to exploit the resources in the expanded area and gives it the responsibility of managing it.

The recognition of Brazil’s claim, although only partial, has annoyed some neighbour countries, because of the huge economic benefits offered by the additional continental shelf it was granted.

Figueiredo said the challenge now is to monitor and protect the continental shelf. “We don’t have full sovereignty with regard to the maritime territory. Brazilian society is unaware of the important need to protect the Blue Amazon. There are enormous shortcomings, with respect to our needs.”

In 2005 a plan was approved to upgrade the navy with an estimated investment of 30 billion dollars until 2025. Defending a country is a complex task, said Figueiredo, because it involves a number of dimensions: military, economic, technical and scientific.

But scientific research in Brazil’s marine territory is currently far outpaced, he said, by the exploitation of resources such as the oil located 250 km off the coast and 7,000 metres below the ocean surface, beneath a thick layer of salt, sand and rocks.

Development of the so-called presalt reserves, discovered a decade ago, would make Brazil one of the 10 countries with the largest oil reserves in the world. And they already provide 27 percent of the more than three million barrels a day of oil and gas equivalent produced by this country.

“That region belongs to Brazil, the country has assumed commitments with the U.N. to monitor and study the living and non-living resources like oil, gas and minerals. If we don’t preserve it, we’ll lose this great treasure,” oceanographer David Zee, at the Rio de Janeiro State University, told Tierramérica.

In his opinion, Brazil is far from living up to the commitments assumed with the international community. “We have duties – we have to meet the U.N.’s scientific research requirements. We have to take greater care of our marine resources,” he said.

Apart from the oil and gas wealth, a large part of the EEZ borders the Mata Atlántica ecosystem, which extends along 17 of Brazil’s 26 states, 14 of which are along the coast.

The environmental organisation SOS Mata Atlántica explains that coastal and marine areas represent the ecological transition between land and marine ecosystems like mangroves, dunes, cliffs, bays, estuaries, coral reefs and beaches. The biological wealth of these ecosystems turns marine areas into enormous natural nurseries.

And the convergence of cold water from the South with warm water from the Northeast contributes to biological diversity and provides shelter for numerous species of flora and fauna.

But only 1.5 percent of Brazil’s maritime territory is under any form of legal protection, Mata Atlantica reports.

Thus, ensuring national sovereignty over jurisdictional waters is still an enormous political and military challenge. In March, some 15,000 naval troops and 250 Navy boats and aircraft took part in Operation Blue Amazon, the biggest of its kind carried out so far in Brazilian waters.

“This was an opportunity to train and guarantee the security of navigation, crack down on drug trafficking, and patrol the sea. The mission involved the entire territorial extension of Brazil,” Lieutenant Commander Thales da Silva Barroso Alves, commander of one of the three offshore patrol vessels that Brazil has to monitor the Blue Amazon, told IPS.

These vessels control the extensive coast in “areas of great economic interest, exploitation and accidents. Illegal fishing is also a recurrent issue,” he said.

The officer argued that the extraction of marine resources should be carried out in a “conscious, sustainable fashion,” with the aim of preserving biodiversity.

Figueiredo, the political scientist, concurs. “Our ability to defend the Blue Amazon depends on our capacity to develop technical-scientific means of protecting biodiversity in such an extensive area,” he said.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Cash-Strapped Latin American Countries Turn to China for Credithttp://www.ipsnews.net/2015/04/cash-strapped-latin-american-countries-turn-to-china-for-credit/?utm_source=rss&utm_medium=rss&utm_campaign=cash-strapped-latin-american-countries-turn-to-china-for-credit http://www.ipsnews.net/2015/04/cash-strapped-latin-american-countries-turn-to-china-for-credit/#comments Tue, 28 Apr 2015 01:06:31 +0000 Mario Osava http://www.ipsnews.net/?p=140358 Cidade de Kilamba is a new housing development built entirely by Chinese firms south of Luanda, the Angolan capital, to accommodate half a million people in five- to 13- storey apartment buildings with “smart” elevators, schools, shops and leisure facilities. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Apr 28 2015 (IPS)

Angolans are generally grateful for China’s participation in the reconstruction of their central African country, in spite of the fact that some of the roads and buildings built by Chinese firms are of poor quality, and mainly Chinese labourers have been hired rather than local workers.

To rebuild the infrastructure destroyed by the civil war, Angola needed finance which was denied to it by the West, whereas China supplied credit and engineering expertise without imposing impossible conditions on a country that only achieved peace 27 years after winning independence in 1975, Angolan leaders declare.

On the opposite side of the Atlantic ocean, several Latin American countries in financial difficulties have recently turned to China as a sort of lender of last resort. Argentina and Venezuela, for example, lacking access to international credits, obtained large loans from Chinese banks.

For China, it makes no sense to refuse loans to countries with strong agricultural production or that possess plenty of commodities, especially oil and gas. There is no need to be concerned about their solvency if their products guarantee their loans, whatever the reasons for their difficulties.

Brazil’s state oil giant Petrobras announced on Apr. 1 an injection of 3.5 billion dollars from China to relieve its finances, which have suffered from the corruption scandal that has rocked the economy, the government, large companies and several political parties in the country since 2014.

The loan from China Development Bank is helping Petrobras weather a storm that also includes gross management and planning mistakes which raised the cost of constructing two refineries, of the purchase of another plant in the U.S. city of Pasadena, Texas, and of other projects by tens of billions of dollars.

The crises faced by potential Petrobras suppliers provide opportunities for China, but are not seen as indispensable. China Development Bank previously loaned Petrobras 10 billion dollars in 2009, when the oil company appeared prosperous and had recently discovered vast reserves in the pre-salt layer off the Brazilian coast.

This loan will be repaid by a minimum of 10 years’ oil supply to China.

Unequal exchange

“China’s financial power tends to accentuate the trade imbalance,” when countries or whole regions export virtually only commodities to China, and import Chinese manufactured goods, said Luis Afonso Lima, president of the Sociedade Brasileira de Estudos de Empresas Transnacionais e da Globalizaçao Econômica (SOBEET – Brazilian Society for the Study of Transnational Corporations and Economic Globalisation).

Iron ore and soy account for 75 percent of Brazilian exports to China, he said, while imports from China are nearly all manufactured goods.

But China “is a new trading partner with a high degree of complementarity, and a win-win situation could be created if we knew how to make the most of the opportunity,” Lima said.

“Brazil must do its homework and define what it wants from China in the long term, and then negotiate, instead of merely reacting passively to Chinese demands,” he said.

In his view, now is the time to make changes to that unequal exchange, because China is facing “the prospect of reducing its exports and stimulating the dynamics of internal demand, whereas in Brazil it is the reverse: the domestic market is weakening and more exports are needed.”

But Lima recognises that Brazil’s economic and political difficulties do not favour the definition of long term strategies and goals in negotiations with an ascendant power like China.

Booming investment

China’s growing involvement in Latin America is also marked by growing investment. SOBEET identified 69 projects announced by Brazil since 2010, the vast majority in processing industries involving medium-sized amounts, that is, less than 100 million dollars.

Only three investments are over one billion dollars: in the first, the State Grid Corporation of China (SGCC) invested five billion dollars, mainly for the purchase of power transmission lines; the second is for extracting and exporting iron ore; and the third is for processing soy.

The list is not complete because of the difficulty of monitoring Chinese investments that are routed through other countries, such as European nations, and arrive at their productive destination without the nationality of origin being known, Lima complained.

China has been increasing its foreign direct investments since the turn of the 21st century, and they reached over 206.8 billion dollars in 2013, according to United Nations figures published by SOBEET.

Latin America has not been a priority destination for Chinese investments. The region has received only 4.1 percent of the total, according to the Economic Commission for Latin America and the Caribbean.

However this will change over the next 10 years. China will invest 250 billion dollars in the region over this period, President Xi Jinping announced in January in Beijing, at the first Ministerial Forum between China and the Community of Latin American and Caribbean States (CELAC).

Some projects are exceptional, like the interoceanic canal in Nicaragua which will compete with the Panama Canal and will cost an estimated 40 billion dollars, four times the GDP of Nicaragua.

A large part of the capital already invested is oil-related. State Chinese oil companies are already taking part in oil and gas extraction in Argentina, Brazil, Ecuador, Peru and Venezuela.

But the most spectacular growth in China-Latin America relations has occurred in trade, which increased 22-fold between 2000 and 2013, to reach 275 billion dollars in 2013. And it is set to double again by the end of this decade, Xi predicted.

The expansion in trade exacerbated the imbalance, but the terms of exchange improved with the boom in prices of Latin American commodities, which lasted at least until 2012.

Credit penetration

The amounts involved in Chinese loans to the region are lower than the trade figures, but also reflect the Asian giant’s expansion and its priority interests in oil, minerals and agricultural produce.

Between 2005 and 2014, borrowing from China by the region totalled 119 billion dollars, according to the databank of Inter-American Dialogue, a forum for political and business leaders of the Americas that includes former presidents of several countries.

Of this total, nearly half – 56.3 billion dollars – was loaned to Venezuela, which possesses the world’s largest oil reserves. Next in order of importance are Brazil and Argentina, which are big exporters of soy and received 22 billion and 19 billion dollars, respectively.

Mexico, the second largest Latin American economy, is in sixth place in terms of loans from Chinese state banks, with 2.4 billion dollars, less than one-quarter of the amount borrowed by Ecuador (10.8 billion dollars) and less even than the credit extended to The Bahamas (2.9 billion dollars).

Edited by Estrella Gutiérrez/Translated by Valerie Dee

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Planned Mega-Port in Brazil Threatens Rich Ecological Regionhttp://www.ipsnews.net/2015/04/planned-mega-port-in-brazil-threatens-rich-ecological-region/?utm_source=rss&utm_medium=rss&utm_campaign=planned-mega-port-in-brazil-threatens-rich-ecological-region http://www.ipsnews.net/2015/04/planned-mega-port-in-brazil-threatens-rich-ecological-region/#comments Fri, 24 Apr 2015 19:00:05 +0000 Fabiola Ortiz http://www.ipsnews.net/?p=140301 The town of Ilhéus in the Northeast Brazilian state of Bahia, part of whose coastline will be modified by the construction of the Porto Sul port complex, which environmentalists and local residents are protesting because of the serious ecological and social damage it will cause. Credit: Courtesy Instituto Nossa Ilhéus

The town of Ilhéus in the Northeast Brazilian state of Bahia, part of whose coastline will be modified by the construction of the Porto Sul port complex, which environmentalists and local residents are protesting because of the serious ecological and social damage it will cause. Credit: Courtesy Instituto Nossa Ilhéus

By Fabiola Ortiz
RIO DE JANEIRO, Apr 24 2015 (IPS)

Activists and local residents have brought legal action aimed at blocking the construction of a nearly 50 sq km port terminal in the Northeast Brazilian state of Bahia because of the huge environmental and social impacts it will have.

The biggest project of its kind in Brazil has given rise to several court battles. With a budget of 2.2 billion dollars, Porto Sul will be built in Aratiguá, on the outskirts of the city of Ilhéus, at the heart of the Cocoa Coast’s long stretches of heavenly beaches, where the locals have traditionally depended on tourism and the production of cocoa for a living.

The courts have ordered four precautionary measures against the project, while civil society movements say they will not stop fighting the projected mega-port with legal action and protests.

The Porto Sul port complex will be financed by the Brazilian government, through its growth acceleration programme, which focuses largely on the construction of infrastructure.

Construction of the deepwater port and the complex will employ 2,500 people at its peak. But the project is staunchly opposed by locals and by social organisations because of what activists have described as the “unprecedented” environmental impact it will have.

Critics of the project have dubbed it the “Belo Monte of Bahia” – a reference to the huge hydroelectric dam being built on the Xingú river in the northern Amazon jungle state of Pará, which will be the third-largest in the world in terms of generation capacity.

Environmentalists protest that the new port terminal and its logistical and industrial zone will hurt an ecological corridor that connects two natural protected areas.

These are the 93-sq-km Sierra de Conduru State Park, which boasts enormous biodiversity in flora and fauna, and the 4.4-sq-km Boa Esperança Municipal Park in the urban area of Ilhéus, which is a refuge for rare species and a freshwater sanctuary.

Construction of the port complex “shows a lack of respect for the region’s natural vocation, which is tourism and conservation. Since 2008 we have been fighting to show that the project is not viable,” activist Maria Mendonça, president of the Nossa Ilhéus Institute, dedicated to social monitoring of public policies, told IPS.

Ilhéus, a city of 180,000 people, has the longest coastline in the state, and is famous as the scenario for several novels by renowned Bahia writer Jorge Amado, such as “Gabriela, Clove and Cinnamon”.

Digital view of a small part of the future Porto Sul port complex in Aratiguá, in the Northeast Brazilian city of Ilhéus. Credit: Bahia state government

Digital view of a small part of the future Porto Sul port complex in Aratiguá, in the Northeast Brazilian city of Ilhéus. Credit: Bahia state government

The project’s environmental impact study, carried out in 2013, identified 36 potential environmental impacts, 42 percent of which could not be mitigated. Some of them will affect marine species that will be driven away by the construction work, including dolphins and whales. The project will also kill fauna living on the ocean floor.

Aratiguá, the epicentre of the Porto Sul port, “is an important fishing location in the region, where more than 10,000 people who depend on small-scale fishing along a 10-km stretch of the shoreline clean their catch,” Mendonça said.

An estimated 100 million tons of earth will be moved in this ecologically fragile region, where environmentalists are sounding the alarm while authorities and the company promise economic development and jobs, in a socioeconomically depressed area.

Bahia Mineração (Bamin) reported that until Porto Sul is operative, the Caetité mine will continue to produce a limited output of one million tons a year of iron ore.

According to Bamin, “the company will contribute to the social and economic development of Bahia and its population.” It says the Projeto Pedra de Ferro project will create 6,600 jobs and estimates the company’s total investment at three billion dollars in the mine and its terminal in the port complex.

Officials in the state of Bahia, which controls the Porto Sul project, reported that Brazil’s environmental authority held 10 public hearings to discuss the port complex, and said that 17 sq km of the complex will be dedicated to conservation.

A communiqué by the Bahia state government stated that all of the families to be affected by the works are included in a programme of expropriation and resettlement. Indemnification payments began in the first quarter of this year.

Social and environmental activist Ismail Abéde is one of 800 people living in the Vila Juerana coastal community, who will be displaced by the port complex project.

“The erosion will stretch 10 km to the north of the port, where we live, and the sea will penetrate up to 100 metres inland. It will be a catastrophe,” Abéde complained to IPS.

He pointed out that the complex was originally to form part of the Projeto Pedra de Ferro project.

That project, operated by Bahia Mineração (Bamin), a national company owned by Eurasian Natural Resources Corporation (ENRC) and Zamin Ferrous, is to extract an estimated 20 million tons of iron ore a year in Caetité, a city of 46,000 people in the interior of the state.

The iron ore will be transported on a new 400-km Caetité-Ilhéus railway, built mainly to carry the mineral to Bamin’s own shipping terminal in Porto Sul.

The mining project was granted an environmental permit in November 2012 and an operating license in June 2014.

Meanwhile, the Porto Sul complex received a building permit on Sep. 19, 2014, and construction is to begin within a year of that date at the latest. The complex is to be up and running by the end of 2019.

Porto Sul, the biggest port being built in Northeast Brazil and one of the largest logistical structures, will be the country’s third-largest port,l moving 60 million tons in its first 10 years of activity.

The main connection with the complex will be by rail. But an international airport is also to be built in its area of influence, as well as new roads and a gas pipeline.

The interconnected Projeto Pedra de Ferro requires a 1.5 billion dollar investment, and the mine’s productive potential is 398 million tons, which would mean a useful life of 20 years.

“The mine is not sustainable and the railway to carry the mineral to the port runs through protected areas and local communities,” Mendonça complained.

Activists argue that iron ore dust, a toxic pollutant, will be spread through the region while it is transported, affecting cocoa crops and the rivers crossed by the railroad.

Abedé also protested the way the company has informed the families that will be affected by either of the two projects. He said neither the company nor the authorities have offered consultation or dialogue.

“The state can expropriate property when it is for the collective good, not for a private international company,” he said.

The Eurasian Natural Resources Corporation (ENRC), a United Kingdom-based multinational, was delisted from the London Stock Exchange in November 2013, accused of fraud and corruption.

“We are preparing reports that we will present to public banks to keep them from financing the projects,” said Abedé, referring to one of the measures the activists plan to take to fight the project, along with court action.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Plunging Oil Prices Won’t Kill Vaca Muertahttp://www.ipsnews.net/2015/04/plunging-oil-prices-wont-kill-vaca-muerta/?utm_source=rss&utm_medium=rss&utm_campaign=plunging-oil-prices-wont-kill-vaca-muerta http://www.ipsnews.net/2015/04/plunging-oil-prices-wont-kill-vaca-muerta/#comments Fri, 10 Apr 2015 07:42:31 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=140111 The Loma Campana camp where YPF and Chevron produce shale oil in the southwest Argentine province of Neuquén. So far, the plunging of oil prices has not modified the costely development of this unconventional fuel. Credit: Fabiana Frayssinet/IPS

The Loma Campana camp where YPF and Chevron produce shale oil in the southwest Argentine province of Neuquén. So far, the plunging of oil prices has not modified the costely development of this unconventional fuel. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES, Apr 10 2015 (IPS)

Despite the precipitous fall in global oil prices, Argentina has continued to follow its strategy of producing unconventional shale oil, although in the short term there could be problems attracting the foreign investment needed to exploit the Vaca Muerta shale deposit.

The uncertainty has come on the heels of the initial euphoria over the exploitation of shale oil and gas, of which Argentina has some of the world’s largest reserves.

Is the Vaca Muerta shale oil and gas field in intensive care, now that the price of a barrel of oil has plummeted from 110 dollars to under 50 in just seven months? That is the question repeated by financial and oil industry experts.

Argentina’s energy trade deficit climbed to almost seven billion dollars in 2014, partly due to the decline in the country’s conventional oil reserves.

Eliminating that deficit depends on the development of Vaca Muerta, a major shale oil and gas deposit in the Neuquén basin in southwest Argentina. At least 10 billion dollars a year in investment are needed over the next few years to tap into this source of energy.“Conventional oil production has peaked, so to meet the rise in demand it will be necessary to develop unconventional sources. And Argentina is one of the best-placed countries to do so.” -- Víctor Bronstein

“In the short term, it would be best to import, rather than exploit the shale resources,” Víctor Bronstein, the director of the Centre of Studies on Energy, Policy and Society, told IPS.

“But taking a more strategic view, investment in and development of these resources must be kept up, since oil prices are going to start climbing again in the near future and we have to have the capacity to produce our own resources when that happens,” he added.

That is how President Cristina Fernández saw things, he said, when she set a domestic price of 72 dollars a barrel – “40 percent above its international value” – among other production incentives that were adopted to shore up Vaca Muerta.

According to the state oil company Yacimientos Petrolíferos Fiscales (YPF), Vaca Muerta multiplied Argentina’s oil reserves by a factor of 10 and its gas reserves by a factor of 40, which will enable this country not only to be self-sufficient in energy but also to become a net exporter of oil and gas.

YPF has been assigned 12,000 of the 30,000 sq km of the shale oil and gas deposit in the province of Neuquén.

The company admits that to exploit the deposit, it will need to partner with transnational corporations capable of providing capital. It has already done so with the U.S.-based Chevron in the Loma Campana deposit, where it had projected a price of 80 dollars a barrel this year.

“Who is going to invest in unconventional oil and gas at the current prices?” the vice president of the Grupo Moreno, Gustavo Calleja, commented to IPS.

“We have to hold on to Vaca Muerta and continue studying its deposits in just a few pilot wells, to see how deep they are and what kind of drilling is necessary to keep down costs and curb the environmental impacts,” said Calleja, who was the government’s undersecretary of fuel in the 1980s.

YPF technicians working on one of the shale oil drilling rigs in the Loma Campana shale gas field in Vaca Muerta in southwest Argentina. Credit: Fabiana Frayssinet/IPS

YPF technicians working on one of the shale oil drilling rigs in the Loma Campana shale gas field in Vaca Muerta in southwest Argentina. Credit: Fabiana Frayssinet/IPS

Hydraulic fracturing or “fracking”, the technique used to extract shale oil and gas, involves the high-pressure injection of a mix of water, sand and chemical additives into the parent-rock formations at a depth of over 2,000 metres, in order to release the trapped oil and gas which flows up to the surface through pipes.

Besides being very costly, fracking poses environmental risks, as it requires huge volumes of water, pollutes aquifers, and can cause earthquakes.

The shale boom that began in the United States in 2008 was driven, among other factors, by high oil prices, which provided a profit margin.

“At the current prices only those who have cutting-edge technology can develop their shale reserves,” said Calleja.

The cost of producing a barrel of shale oil is based on variables such as extraction, exploration, investment amortization and the payment of taxes and royalties. In the United States, the cost is calculated at between 40 and 70 dollars.

That fact, explained Bronstein, led to an over 30 percent reduction in drilling activity since prices fell, “which will bring down production over the next few months.”

In Argentina, shale development is just starting, which means costs are high “due to a question of scale and problems of logistics and infrastructure,” said the expert.

In the United States, “developing a shale well, including fracking, costs around three million dollars,” while in Argentina “it costs more than twice that,” he said.

“The cost of extracting conventional oil in Argentina ranges between 20 and 30 dollars a barrel, while it costs around 90 dollars to extract a barrel of shale oil, although that will gradually go down as Vaca Muerta is developed,” he said.

Argentina does not yet produce shale gas on a commercial scale, as it still has large reserves of conventional gas. YPF’s shale oil production represents 10 percent of the company’s total output, and between three and four percent of the oil extracted by all operating companies in the country.

Canada and China produce unconventional oil on a commercial scale. But due to their geologic and operative characteristics, the United States and Argentina are seen as having the greatest potential in terms of future production of shale oil and gas.

YPF argues that with the gradual reduction in production costs, a rise in output, and higher domestic oil prices, Vaca Muerta is still profitable.

The industry is waiting for the collapse in prices to bring down the costs of international inputs and services, thus reducing the high domestic industrial costs.

YPF has also signed agreements for the joint exploitation of shale deposits with Malaysia’s Petronas and Dow Chemical of the United States, while other transnational corporations have announced their intention to invest in Vaca Muerta.

Bronstein believes the investments will continue to flow in because they were planned with an eye to “significant production in five years.”

“This means investors don’t take the current price of crude oil into account as much as the future price. And virtually all analysts agree that oil prices will rally within a few years,” he said.

“Conventional oil production has peaked, so to meet the rise in demand it will be necessary to develop unconventional sources. And Argentina is one of the best-placed countries to do so,” Bronstein added.

Cristian Folgar, who was undersecretary of fuels last decade, said “any snapshot of the market today would be distorted because the costs of different oil industry services have not yet settled.”

“YPF will continue to forge ahead and will not slow down investments that depend on its decision because the company currently channels its entire flow of investment into Argentina,” he told IPS.

In his view, international corporations will reduce their investments at a global level, which means “YPF is not at all likely to reach new joint venture agreements with other oil companies until the situation stabilises.”

But “those who have already started to invest are not going to back out,” he added.

“Argentina continues to pay for crude and gas at the same prices as before the start of this downward price trend,” Folgar said. “Since a change of government lies just ahead, new developments will probably wait for the next government to send signals indicating what its plans are in the energy sector.”

Calleja is worried that Saudi Arabia, the world’s leading oil exporter, and the country that according to experts is pulling the strings of the current price collapse in order to – among other goals – push shale out of the market, “may drive prices even further down.”

In the face of what he describes as a global “war of interests”, he believes it is a good time to start looking to energy sources other than fossil fuels.

Calleja argues in favour of hydroelectricity and nuclear energy, which currently represent just 14 percent of Argentina’s energy mix, but have “lower economic and environmental costs.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: Brazil at the Crossroadshttp://www.ipsnews.net/2015/04/opinion-brazil-at-the-crossroads/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-brazil-at-the-crossroads http://www.ipsnews.net/2015/04/opinion-brazil-at-the-crossroads/#comments Wed, 01 Apr 2015 06:45:17 +0000 Fernando Cardim de Carvalho http://www.ipsnews.net/?p=139936

In this column, Fernando Cardim de Carvalho, economist and professor at the Federal University of Río de Janeiro, looks at the political and economic context within which newly re-elected President Dilma Rousseff is operating and argues that Brazil is living through a very dangerous period, with neither the government nor the parliamentary opposition led by leaders that the population trusts.

By Fernando Cardim de Carvalho
RIO DE JANEIRO, Apr 1 2015 (IPS)

Even moderately well-informed analysts knew that the Brazilian economy was in dire straits as President Dilma Rousseff initiated her second term in office in January.

Unlike her predecessor, Luiz Inácio Lula da Silva (2003-2011), Rousseff had not the same luck with the situation of the international economy. But also, unlike Lula, Rousseff showed herself a poor saleswoman for Brazilian goods and an even poorer manager of domestic economic policy.

Fernando Cardim de Carvalho

Fernando Cardim de Carvalho

There was a strong suspicion that economic policy, especially in the last two years of her first term, had been conducted in ad hoc ways and that serious adjustments would be needed to steer the economy back to working condition anyway. Still, the situation seemed to be even worse than most analysts feared.

More surprising, however, is to find out that Brazilian politics is also in dire straits. Caught off guard by the Petrobras corruption scandal, federal authorities, beginning with Rousseff herself, seemed to become paralysed by the rapid fall in public support, completely losing the power of initiative and creating a dangerous political vacuum in the country.

It is a vacuum rather than a political threat because the opposition seems to be as lost as the president. The political right, never very fond of democratic institutions any way, seemed to be more interested in making the president “bleed” – as stated by Senator (and former vice-presidential candidate) Aloysio Nunes Ferreira, of the Brazilian Social Democracy Party – than with fighting for political hegemony.

Economic problems were certainly fostered by the quality of economic policy-making in the second half of Rousseff’s first term. The realisation that tailwinds created by the Chinese demand for raw materials were no longer blowing led the government to implement a series of measures to stimulate the economy that turned out to be largely useless.

It was not “heterodoxy” that characterised the policy, it was uninformed wishful thinking. A plethora of measures were taken in isolation, without any apparent unifying strategy behind them, distributed mostly as “gifts” from the federal government (which later contributed to the public perception that corruption became a system of government). “Brazil is living through a very dangerous period right now. Neither the government, nor the parliamentary opposition are led by leaders the population trusts”

Plagued by semi-structural exchange rate problems, whereby Brazilian producers lose competitiveness in the face of imported goods in domestic markets and of other sellers in international markets, the federal administration tried to deal with them piecemeal, mostly through instruments like tax reductions or changes in tax rates.

Obsessed with car production, the government burned resources trying to stimulate production (only to meet increasing resistance of other countries to import them, most notably Argentina), again without any strategy thinking about how these newly-produced automobiles would be used in polluted and traffic-jammed Brazilian cities.

The federal government was not deficient only in terms of strategic thinking but also in terms of home caretaking: all available evidence points to the high probability that tax reductions and other similar measures were decided without any calculation of costs, lost fiscal revenues, and so on.

Anti-cyclical macroeconomic policy in late 2008 relied to a large extent on the expansion of consumption expenditures fuelled by increasing household indebtedness. The increase in non-performing loans and income stagnation made this option more and more unsustainable. Investment, in contrast, public and private, repeatedly frustrated expectations.

Unable to finance badly needed infrastructure investments, the government showed itself to be extraordinarily slow in devising appropriate strategies to attract private investors to implement them. Apparently lost in their own inability to define a way out of the mess, the government “muddled through” situations where more forceful definitions were required, as was the case of electric power.

The list of failures or of situations where the government showed inability to lead is long and well known. What was surprising to some extent was to find out that all evidence suggests that the government itself was unaware of what was going on.

Winning re-election by a narrow margin, President Rousseff, characteristically after a long period of hesitation, decided to take a 180-degree turn, asking a known orthodox and fiscal conservative economist to head an empowered Ministry of Finance, surprising even her supporters who seemed to be perplexed by the need to defend policies that they hotly denounced when presented by opposition politicians.

This picture would be difficult enough to manage without the Petrobras scandal. But Petrobras is not only the largest company in the country, it is practically a symbol of the nationality. Besides, energy was supposed to be Rousseff’s area of expertise and she was in fact responsible for the company’s policies for a while, as Minister of Mines and Power.

An increasingly loud murmur of a possible impeachment of the president led her to equivocal political decisions, beginning with the definition of her cabinet, widely considered to be particularly low quality, and alienating not only her major party in government, the Brazilian Democratic Movement Party, but even the majority of her own Workers’ Party.

The result of such initiatives was illustrated by the twin public demonstrations of Mar. 13 and 15.

On Mar. 13, nominal supporters of Rousseff marched through the streets of most of the largest cities in the country. Speaking to the press, most of the leaders of the march (Lula did not participate) declared conditional support for Rousseff – that is, conditional on the firing of the Minister of Finance and change of newly announced austerity policies.

On Mar. 15, an even larger crowd marched in the same cities declaring unconditional opposition to the president.

Brazil is living through a very dangerous period right now. Neither the government, nor the parliamentary opposition are led by leaders the population trusts. The president is slow and generally equivocal when making fateful decisions. The right-wing opposition seemed to be more interested in enjoying the possibility of enacting a “third” ballot to obtain at least a moral condemnation of the president.

This would be bad enough for a country that has just celebrated thirty years of civilian government. When the economy adds its own heavy problems to the political vacuum, it is impossible not to fear the future. (END/IPS COLUMNIST  SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

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Nicaragua’s Future Canal a Threat to the Environmenthttp://www.ipsnews.net/2015/03/nicaraguas-future-canal-a-threat-to-the-environment/?utm_source=rss&utm_medium=rss&utm_campaign=nicaraguas-future-canal-a-threat-to-the-environment http://www.ipsnews.net/2015/03/nicaraguas-future-canal-a-threat-to-the-environment/#comments Tue, 31 Mar 2015 07:45:01 +0000 Jose Adan Silva http://www.ipsnews.net/?p=139956 Executives of the Chinese company HKDN and members of the Nicaraguan Grand Interoceanic Canal Commission, behind a large banner on Dec. 22, 2014, in the Pacific coastal town of Brito Rivas, during the ceremony marking the formal start of the gigantic project that will cut clean across the country. Credit: Mario Moncada/IPS

Executives of the Chinese company HKDN and members of the Nicaraguan Grand Interoceanic Canal Commission, behind a large banner on Dec. 22, 2014, in the Pacific coastal town of Brito Rivas, during the ceremony marking the formal start of the gigantic project that will cut clean across the country. Credit: Mario Moncada/IPS

By José Adán Silva
MANAGUA, Mar 31 2015 (IPS)

The new interoceanic canal being built in Nicaragua has brought good and bad news for the scientific community: new species and archeological sites have been found and knowledge of the local ecosystems has grown, but the project poses a huge threat to the environment.

Preliminary reports by the British consulting firm Environmental Resources Management (ERM) revealed the existence of previously unknown species in the area of the new canal that will link the Pacific and Atlantic oceans. The study was commissioned by Hong Kong Nicaragua Canal Development (HKND Group), the Chinese company building the canal.

Among other findings, the study, “Nicaragua’s Grand Canal”, presented Nov. 20 in Nicaragua by Alberto Vega, the consultancy’s representative in the country, found two new species of amphibians in the Punta Gorda river basin along Nicaragua’s southern Caribbean coast.

The two new kinds of frogs have not yet been fully studied, said Vega, who also reported 213 newly discovered archaeological sites, and provided an assessment of the state of the environment along the future canal route.

The aim of the study was to document the main biological communities along the route and in adjacent areas, and to indicate the species and habitats in need of specific conservation measures in order to identify opportunities to prevent, mitigate and/or compensate for the canal’s potential impacts.

The 278-km waterway, which includes a 105-km stretch across Lake Cocibolca, will be up to 520 metres wide and 30 metres deep. Work began in December 2014 and the canal is expected to be completed by late 2019, at a cost of over 50 billion dollars.

The environmental impact study will be ready in late April, Telémaco Talavera, the spokesman for the presidential Nicaraguan Grand Interoceanic Canal Commission, told Tierramérica.

“The studies are carried out with cutting-edge technology by an international firm that is a leader in this area, ERM, with a team of experts from around the world who were hired to provide an exhaustive report on the environmental impact and the mitigation measures,” he said.

Three farmers study the route for the interoceanic canal on a map of Nicaragua, which the Chinese firm HKND Group presented in the southern city of Rivas during one of the meetings that the consortium has organised around the country with people who will be affected by the mega-project. Credit: José Adán Silva/IPS

Three farmers study the route for the interoceanic canal on a map of Nicaragua, which the Chinese firm HKND Group presented in the southern city of Rivas during one of the meetings that the consortium has organised around the country with people who will be affected by the mega-project. Credit: José Adán Silva/IPS

Víctor Campos, assistant director of the Humboldt Centre, told Tierramérica that HKND’s preliminary documents reveal that the canal will cause serious damage to the environment and poses a particular threat to Lake Cocibolca.

The 8,624-sq-km lake is the second biggest source of freshwater in Latin America, after Venezuela’s Lake Maracaibo.

Campos pointed out that HKND itself has recognised that the route that was finally chosen for the canal will affect internationally protected nature reserves home to at least 40 endangered species of birds, mammals, reptiles and amphibians.

The route will impact part of the Cerro Silva Nature Reserve and the Indio Maiz biological reserve, both of which form part of the Mesoamerican Biological Corridor (CBM), where there are endangered species like scarlet and great green macaws, golden eagles, tapirs, jaguars, spider monkeys, anteaters and black lizards.

Along with the Bosawas and Wawashan reserves, Indio Maíz and Cerro Silva host 13 percent of the world’s biodiversity and approximately 90 percent of the country’s flora and fauna.

This tropical Central American country of 6.1 million people has Pacific and Caribbean coastlines and 130,000 sq km of lowlands, plains and lakes. There have been several previous attempts to use Lake Cocibolca to create a trade route between the two oceans.

The Cocibolca Group, made up of a dozen environmental organisations in Nicaragua, has warned of potential damage by excavation on indigenous land in the CBM, on the country’s southeast Caribbean coast.

One site that would be affected is Booby Cay, surrounded by coral reefs and recognised by Birdlife International as an important natural habitat of birds, sea turtles and fish.

Studies by the Cocibolca Group say that dredging with heavy machinery, the construction of ports, the removal of thousands of tons of sediment from the lake bottom, and the use of explosives to blast through rock would have an impact on the habitat of sea turtles that nest on Nicaragua’s southwest Pacific coast.

Map of Nicaragua with the six possible routes for the Grand Canal. The one that was selected was number four, marked in green. Credit: Courtesy of ERM

Map of Nicaragua with the six possible routes for the Grand Canal. The one that was selected was number four, marked in green. Credit: Courtesy of ERM

The selected route, the fourth of the six that were considered, will run into the Pacific at Brito, 130 km west of Managua. A deepwater port will be built where there is now a beach that serves as a nesting ground for sea turtles.

ERM’s Talavera rejects the “apocalyptic visions” of the environmental damage that could be caused by the new waterway. But he did acknowledge that there will be an impact, “which will be focalised and will serve to revert possible damage and the already confirmed damage caused by deforestation and pollution along the canal route.”

The route will run through nature reserves, areas included on the Ramsar Convention list of wetlands of international importance, United Nations Educational, Scientific and Cultural Organisation (UNESCO) biosphere reserves, and water basins.

According to Talavera, besides the national environmental authorities, HKND consulted institutions like the Ramsar Convention, UNESCO, the International Union for Conservation of Nature and Birdlife International, “with regard to the feasibility of mitigating and offsetting the possible impacts.”

The canal is opposed by environmental organisations and affected communities, some of which have filed a complaint with the Inter-american Commission on Human Rights (IACHR).

In an IACHR hearing on Mar. 16, Mónica López, an activist with the Cocibolca Group, complained that Nicaragua had granted HKND control over the lake and its surrounding areas, including 16 watersheds and 15 protected areas, where 25 percent of the country’s rainforest is concentrated.

López told Tierramérica that construction of the canal will also lead to “the forced displacement of more than 100,000 people.”

In addition, she criticised “the granting to the Chinese company of total control over natural resources that have nothing to do with the route but which according to the HKND will be of use to the project, without regard to the rights of Nicaraguans.”

The 2013 law for the construction of the Grand Interoceanic Canal stipulates that the state must guarantee the concessionaire “access to and navigation rights to rivers, lakes, oceans and other bodies of water within Nicaragua and its territorial waters, and the right to extend, expand, dredge, divert or reduce these bodies of water.”

The state also gives up the right to sue the investors in national or international courts for any damage caused to the environment during the study, construction and operation of the waterway.

In the IACHR hearing in Washington, representatives of the government, as well as Talavera, rejected the allegations of the environmentalists, which they blamed on “political interests” while arguing that the project is “environmentally friendly”.

They also repeated the main argument for the construction of the canal: that it will give a major boost to economic growth and will enable Nicaragua, where 42 percent of the population is poor, to leave behind its status as the second-poorest country in the hemisphere, after Haiti.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Renewable Energies in Latin America Weather Low Oil Priceshttp://www.ipsnews.net/2015/03/renewable-energies-in-latin-america-weather-low-oil-prices/?utm_source=rss&utm_medium=rss&utm_campaign=renewable-energies-in-latin-america-weather-low-oil-prices http://www.ipsnews.net/2015/03/renewable-energies-in-latin-america-weather-low-oil-prices/#comments Mon, 09 Mar 2015 17:34:03 +0000 Emilio Godoy http://www.ipsnews.net/?p=139557 One of Mexico’s 31 wind parks. By 2020, installed capacity for wind power in this country will be 15 gigawatts. Credit: Courtesy of Dforcesolar

One of Mexico’s 31 wind parks. By 2020, installed capacity for wind power in this country will be 15 gigawatts. Credit: Courtesy of Dforcesolar

By Emilio Godoy
MEXICO CITY, Mar 9 2015 (IPS)

Traditionally, falling oil prices have discouraged development of renewable energy sources, but clean energy is making steady progress in Latin America, according to regional experts.

Most Latin American countries have set medium and long-term targets for alternative energy supply and consumption and these projects are being maintained in spite of economic fluctuations and plummeting international crude oil prices.

According to Hugo Ventura, the head of the Energy and Natural Resources Unit of the Economic Commission for Latin America and the Caribbean (ECLAC), there are two factors that call into question the view that cheaper oil will act as a brake on the development of renewable energy sources.

“One of these factors is that countries are committed to increasing the contribution of renewables, in order to diversify their energy mix, decrease dependence on fossil fuels and reduce carbon dioxide emissions because of climate change. The other aspect is that players in the energy sector are taking the long-term view,” Ventura told IPS.

Studies provide evidence that renewable energy sources in the region are in robust health. The World Wind Energy Association (WWEA) said on Feb. 5 that preliminary figures for 2014 were “very bright,” in a report that confirmed that “wind power investment is still speeding up at an enormous pace.”“There is unstoppable inertia; many projects under construction will soon be operating , so growth is continuing. There are renewable energy tendering schemes in the pipeline that are not going to stop.” -- Hugo Ventura

“Especially the new markets in Latin America as well as in Africa are reflecting the importance which wind power is now playing in the electricity supply, as a cheap and reliable power source,” said Stefan Gsänger, the Secretary General of the WWEA, which is based in the German city of Bonn.

The collapse of fossil fuel prices is damaging the economies of producer countries in the region, such as Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru and Venezuela, where state oil companies are experiencing difficulties in planning and operations.

But it is benefiting net importers, like Central American countries and Chile, which are paying less for their oil. Consumers in both groups of countries may see the cost of their electricity bills fall.

In these circumstances, renewable energy sources are already cost-competitive with fossil fuels like natural gas, according to the report “Renewable power generation costs in 2014” by the International Renewable Energy Agency (IRENA) based in Abu Dhabi, with 139 states as members.

If the health and environmental costs of fossil fuel-fired power are taken into account, renewable sources are even more cost-competitive.

The IRENA study indicates that the average cost of electricity produced by solar plants has fallen to within the range of fossil fuel power generation . Electricity from solar plants installed in 2013 and 2014 cost 11 cents per kilowatt-hour in South America, 12 cents in North America and over 31 cents in Central America and the Caribbean.

Model of the first solar energy plant in Latin America, due to begin operating in the Atacama desert in northern Chile in 2017. Credit: Abengoa Chile

Model of the first solar energy plant in Latin America, due to begin operating in the Atacama desert in northern Chile in 2017. Credit: Abengoa Chile

The average cost of power generated by hydroelectric plants in South America was four cents per kWh.

Hydropower is the biggest renewable source in the region, but it is vulnerable to droughts, like the one currently affecting the south of Brazil. Brazil has 86,000 megawatts (86 gigawatts) of installed hydropower capacity, Mexico has more than 11,000 MW (11 GW), Argentina 10,000 (10 GW) and Colombia almost as much, according to IRENA’s figures.

“Countries will continue to pursue renewable energy sources. For example, wind power is much more economical than natural gas combined cycle plants or hydroelectric power,” Eduardo Rincón, a professor at Universidad Autónoma de la Ciudad de México (Autonomous University of Mexico City), told IPS.

Clean energy alternatives effectively contribute to lowering oil consumption and avoiding carbon dioxide emissions, which cause global warming. Moreover, they generate jobs and attract investment, he said.

Climatescope 2014’s report on “Mapping the global frontiers for clean energy investment” states that Brazil attracted as much as 96.3 billion dollars of investment between 2006 and 2013 for renewable energy development.

Renewables now represent 15 percent of Brazil’s total installed capacity of 126 gigawatts, according to the Climatescope document, which contains 55 country profiles compiled by the Multilateral Investment Fund of the Inter-American Development Bank, in partnership with public and private entities from several countries.

Mexico’s renewable energy sector attracted investments of 11.3 billion dollars in the period 2006-2013. The country has a total installed electricity capacity of 64 gigawatts, of which five percent is contributed by renewable sources.

Clean energy investment in Chile amounted to 7.1 billion dollars in the same period. Total installed power capacity is 17.8 gigawatts with renewable energies having an eight percent share. Peru’s renewables sector received 3.4 billion dollars in investments; the country’s total installed power capacity is 10 gigawatts.

Ventura, of ECLAC, predicted that oil prices will stabilise in 2016 at between 70 and 80 dollars a barrel, a moderate level compared to the average price in 2013 of over 100 dollars a barrel.

“At these prices, there is a viable niche for renewable power. Investors could find stability in the field of electricity,” he said. In his view, the region should aim for a diversified energy matrix, with wind, solar and geothermal power.

“There is unstoppable inertia; many projects under construction will soon be operating , so growth is continuing. There are renewable energy tendering schemes in the pipeline that are not going to stop,” Ventura said.

Argentina wants eight percent of total demand to be provided by renewable sources by 2016.

Chile’s goal is for 20 percent of its electricity to be provided by renewable sources by 2025.

Mexico has set targets of 23 percent of consumption to be supplied by clean energy sources by 2018, 25 percent by 2024 and 26 percent by 2027.
In Ventura’s view, these goals underpin regional plans to reduce polluting emissions by cutting fossil fuel consumption in spite of the current situation of low oil and gas prices.

Rincón, the university professor, said people’s awareness should be raised so that citizens exert pressure for legal changes to be made “in accordance with their demands, not with the interests of small, powerful groups.

“We need a transition towards low-cost energy systems, and renewable resources are heaven-sent: they are free,” he said.

In his view, “It’s a matter of getting the sums right. How much does a wind park or solar installation cost, over its planned service life, compared with continuing to build combined cycle plants?” he asked.

Mexico adopted an energy reform in August 2014 that opened up the entire sector to private local and international capital, including electricity generation from renewable sources.

The package of laws governing the reform includes one on geothermal energy, a resource that the authorities particularly wish to promote.

Edited by Estrella Gutiérrez/Translated by Valerie Dee

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Argentina Moves Towards Marriage of Convenience with Chinahttp://www.ipsnews.net/2015/02/argentina-moves-towards-marriage-of-convenience-with-china/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-moves-towards-marriage-of-convenience-with-china http://www.ipsnews.net/2015/02/argentina-moves-towards-marriage-of-convenience-with-china/#comments Mon, 23 Feb 2015 22:33:52 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=139304 The entrance to Chinatown in Buenos Aires, where a sign promotes the renovation of Argentina’s railways, partly financed by Beijing. Credit: Fabiana Frayssinet/IPS

The entrance to Chinatown in Buenos Aires, where a sign promotes the renovation of Argentina’s railways, partly financed by Beijing. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES, Feb 23 2015 (IPS)

The government of Argentina is building a marriage of convenience with China, which some see as uneven and others see as an indispensable alliance for a new level of insertion in the global economy.

The process forms part of a radical change with respect to Argentina’s diplomacy, which years back involved ties with the United States described as “carnal relations.”

President Cristina Fernández called the new relationship with China an “integral strategic alliance,” after signing a package of 22 agreements with Chinese leader Xi Jinping in Beijing on Feb. 4.

The accords include areas like space technology, mining, energy, financing, livestock and cultural matters. They cover the construction of two nuclear and two hydropower plants, considered key to this country’s goal of energy self-sufficiency.

“Although they are important, the new agreements and others that were signed earlier are insufficient to gauge the dimension of the bilateral commitment,” said Jorge Castro, the director of the Strategic Planning Institute and an expert on China.

“For Argentina, the relationship with China has elements that are essential for insertion into the international system of the 21st century, along with other countries of the South, headed by Brazil,” he told IPS.

“These ties are between the new fulcrum of the global economy, China-Asia, and Argentina as a nation and as a regional unit,” he said.

Castro pointed out that Asia’s giant is currently South America’s leading trade partner, due to the volume of its purchases of raw materials, which implies a level of interdependence given that “China has placed the food security of its population in the hands of South American countries.”

In the case of Argentina, China is its second-largest trading partner, after neighbouring Brazil – displacing long-time partners like the United States and European countries.

In 2014, exports to China totalled five billion dollars while imports stood at 10.8 billion dollars – a bilateral record which represented 11.5 percent of this country’s trade balance, according to Argentina’s Chamber of Commerce.

Prior accords that cemented the alliance

Before Fernández’s visit to China, the two countries had already signed investment agreements in strategic sectors, such as the one between China’s Sinopec and Argentina’s YPF, two state-owned oil companies, for the exploitation of one of the Loma Campana deposits of unconventional oil and gas resources in Vaca Muerta in southern Argentina.

There was also an accord for China to provide some 2.5 billion dollars in financing for the reconstruction of the railway of the Belgrano Cargas y Logística company, which will transport Argentine and Brazilian agricultural products to Chilean ports on the Pacific ocean.

“The investment agreements with China are important to the extent that they facilitate the conditions to continue generating, for example, the infrastructure for development that Argentina needs, in a scenario” of a shortage of foreign currency, economist Fernanda Vallejos told IPS.

The Chinese space station under construction in the southern Argentine province of Neuquén, rejected by the political opposition of all stripes and social groups. Credit: Courtesy of DesarrolloyDefensa

The Chinese space station under construction in the southern Argentine province of Neuquén, rejected by the political opposition of all stripes and social groups. Credit: Courtesy of DesarrolloyDefensa

In July 2014, Argentina reached an 11 billion dollar currency swap agreement with China, to shore up this country’s weakened foreign reserves, of which it received one billion dollars in December.

The swap “has been a very powerful instrument,” which is added to measures by the government and the Central Bank to promote exchange stability and help slow down inflation, said Vallejos, a member of a group that advises the Ministry of the Economy and Public Finance.

Critical voices

Sectors of the business community are critical of the alliance with Beijing, such as the Argentine Industrial Union (UIA) or the Chamber of Exports, which sounded a warning about the asymmetrical nature of the relationship.

This country’s exports to China are only half of what it imports from the Asian giant, and they are basically raw materials or farm products. A full 75 percent is soy or by-products.

Imports, by contrast, are mainly machinery and electronics, computers, telephones, chemical products, motorcycles or parts for household appliances.

The UIA said the framework agreement on economic cooperation and investment, signed in July 2014 and pending final approval by the legislature, “contains clauses that pose an enormous risk to Argentina’s development.”

“Over the last decade, China’s strategy has pursued two central objectives: to consolidate its transnational companies in global value chains and to obtain commodities and inputs with little value-added, for its growing productive and employment needs,” the UIA said in a communiqué.

“In free trade agreements in this era of globalisation, the essential thing is not trade but investment,” said Castro, who questioned the concept of “asymmetry” and backed the agreement with China.

The China expert said the relationship should be analysed in a broader context. For example, by remembering that in the next 10 years, China’s foreign direct investment is estimated to climb to 1.1 trillion dollars.

“The question is how to manage to be part of China’s flow of investment in industry in the next 10 to 20 years,” Castro said.

The UIA agrees that it is important to be part of that current, but with allocations that would not harm local goods and services, which have no chance of receiving Chinese financing, the business chamber said.

The UIA and some trade unions also worry that Chinese labour power, which is included in several projects, will displace local workers.

“Don’t worry, we continue to defend Argentine workers and the business community’s participation,” said centre-left President Fernández, who urged those sectors to engage in technical discussions about the accords.

The new empire?

Some in Argentina see the China of the 21st century as the new England of the 19th century or the United States of the 20th century, in terms of economic and territorial hegemony and domination.

They also question the construction of a Chinese space tracking and control station in the southern Argentine province of Neuquén, which according to the government will monitor, control and gather data as part of China’s programme of missions to explore the moon and outer space.

Raúl Dobrusin, an opposition legislator from Neuquén, told IPS that the agreement, which grants China the use of 200 hectares for 50 years and is opposed by left-wing groups and social organisations, did not go through the Neuquén provincial legislature, which was not informed of the details of the accord.

So far there is no Chinese military presence in the construction project, said Dobrusin, but in his view, the space station poses “major geopolitical risks.”

“If there is a confrontation between powerful nations, we will be a place to be taken into account by the enemies of China…In short, we are getting into an area where the possibility of deciding whether or not to participate in conflicts is no longer a sovereign decision, they won’t ask us,” he warned.

“The alliance transcends economic matters and forms part of the search for independence, on both the economic and political fronts, which makes it possible to reach economic and social development goals, by breaking the yoke of neoliberalism and the empire-dependence logic,” said Vallejos.

China, in her view, “is far from the voracity of the Western powers…It is part of a new global order that is struggling to be born, where the role of emerging countries is no longer one of colonialism but of assuming the position of builders of our own destiny,” said the economist.

“That does not mean that China isn’t obtaining benefits from its ties with our nations, but that it is possible to build a win-win relationship for all of the parties involved,” she said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: Brazil Can Help Steer SDGs Towards Ambitious Targetshttp://www.ipsnews.net/2015/01/opinion-brazil-can-help-steer-sdgs-towards-ambitious-targets/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-brazil-can-help-steer-sdgs-towards-ambitious-targets http://www.ipsnews.net/2015/01/opinion-brazil-can-help-steer-sdgs-towards-ambitious-targets/#comments Thu, 29 Jan 2015 08:45:16 +0000 Daniel Balaban http://www.ipsnews.net/?p=138883 Children having a daily lunch meal at a kindergarten in a poor community in Salvador, Bahia. Brazil's National School Feeding Programme is an example of one of the far-reaching programmes implemented in line with the Millennium Development Goals (MDGs). Credit: Carolina Montenegro/WFP

Children having a daily lunch meal at a kindergarten in a poor community in Salvador, Bahia. Brazil's National School Feeding Programme is an example of one of the far-reaching programmes implemented in line with the Millennium Development Goals (MDGs). Credit: Carolina Montenegro/WFP

By Daniel Balaban
BRASILIA, Jan 29 2015 (IPS)

With the current Millennium Development Goals (MDGs) expiring at the end of this year to be replaced by the Sustainable Development Goals (SDGs) which will set priorities for the next fifteen years, 2015 will be a crucial year for the future of global development.

As a country with an outstanding performance in reaching the MDGs, Brazil can play an important role in shaping and achieving the SDGs.

Extensive consultations with governments and civil society have been held in recent years, and consensus around many issues has been established and channelled into a series of documents that will now guide the final deliberations on the exact content of the SDGs. September 2015 has been set as deadline for their endorsement by U.N. member states.

Daniel Balaban, Director of WFP's Centre of Excellence against Hunger.   Credit: Carolina Montenegro/WFP

Daniel Balaban, Director of WFP’s Centre of Excellence against Hunger. Credit: Carolina Montenegro/WFP

A Working Group has identified 17 goals encompassing issues such as poverty, hunger, education, climate change and access to justice. While some of these topics were already covered by the MDG framework, there is a new set of goals with emphasis on the preservation of natural resources and more sustainable living conditions, meant to reverse contemporary trends of overuse of resources and destruction of ecosystems.

As governments quickly move to adopt the SDGs, they must capitalise on what has been achieved with the MDGs to secure new targets that will go beyond the lowest common denominator.

Brazil has a compelling track record in achieving the current MDGs, and it can use its experience to influence the final negotiations of the SDGs towards ambitious targets.

The country has already reached four of the eight targets – eradication of extreme poverty and hunger, achieving universal primary education, promoting gender equality and combating HIV – and it is likely to achieve the remaining targets by the end of the MDG deadline.“As governments quickly move to adopt the SDGs, they must capitalise on what has been achieved with the MDGs to secure new targets that will go beyond the lowest common denominator”

Through a set of innovative and coordinated policies, Brazil has tackled these different areas and demonstrated that it is possible to radically decrease poverty and hunger within a decade, giving special attention to the most vulnerable groups.

The National School Feeding Programme, for example, is one of the far-reaching programmes implemented so far. In 2009, the existing policy was upgraded to recognise school feeding as a right, whereby all students of public schools are entitled to adequate and healthy meals, prepared by nutritionists and in accordance with local traditions.

At least 30 percent of the food used to prepare these meals must be procured from local producers, with incentives to the purchase of organic produce.

The programme also devotes additional resources to schools with students of traditional populations, often exposed to food insecurity.

Another feature of the policy is the participation of civil society through local school feeding councils, which oversee the implementation of the programme, as well as financial reports produced by municipalities.

Altogether, the programme tackles a wide range of issues, combining action to combat hunger, ensure adequate nutrition (including of the most vulnerable groups), support local farmers and involve civil society, in line with principles of inclusion, equity and sustainability, which are also guiding principles of the future SDGs.

It is a good example of how the incorporation of innovative features to existing policies can result in more inclusion and sustainability while optimising resources.

As it occupies a more prominent role on the world stage, Brazil has been active in promoting such policies in multilateral fora, in addition to investing in South-South cooperation to assist countries to achieve similar advances.

The WFP Centre of Excellence against Hunger is the result of such engagement. In the past three years, the Centre been supporting over 30 countries to learn from the Brazilian experience in combating hunger and poverty.

Brazil is now in a position to showcase tangible initiatives during the SDGs negotiations to prove that through strong political commitment it is possible to build programmes with impact on a range of areas.

Such multi-sectorial action and articulation will be required if countries around the globe are determined to tackle humanity’s most urgent needs related to hunger, adequate living standards for excluded populations, and development, while reversing the trend of climate change and unsustainable use of natural resources.

The world is at a crossroads for ensuring sustainability. If the right choices are not made now, future generations will pay the price. However daunting the task may be, this is the moment to do it.

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

* Daniel Balaban, an economist, is the Director of World Food Programme’s (WFP) Centre of Excellence against Hunger. He has also led the Brazilian national school feeding programme as President of the National Fund for Education Development (FNDE), which feeds 47 million children in school each year. In 2003, he served as the Special Advisor to the Secretary of the Council of Economic and Social Development under the Presidency of the Federative Republic of Brazil.

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Oil, An Invasive Water Species in the Carnival Capitalhttp://www.ipsnews.net/2015/01/oil-an-invasive-water-species-in-the-carnival-capital/?utm_source=rss&utm_medium=rss&utm_campaign=oil-an-invasive-water-species-in-the-carnival-capital http://www.ipsnews.net/2015/01/oil-an-invasive-water-species-in-the-carnival-capital/#comments Mon, 12 Jan 2015 18:39:50 +0000 Mario Osava http://www.ipsnews.net/?p=138601 Fishermen row their small boat out into Guanabara bay from a beach on Gobernador island. In the background can be seen an oil tanker and an island with oil silos belonging to Petrobras. Credit: Mario Osava/IPS

Fishermen row their small boat out into Guanabara bay from a beach on Gobernador island. In the background can be seen an oil tanker and an island with oil silos belonging to Petrobras. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Jan 12 2015 (IPS)

“We ran down to the beach and found a black tide, whose waves didn’t make the sound of water, but the slurp of a thick paste,” said Alexandre Anderson, describing the oil spill in Guanabara bay in the Brazilian state of Rio de Janeiro which turned him into an activist and leader among the local small-scale fishing community.

The January 2000 disaster marked a low point for environmental conditions in the bay, and drew global attention because of the impact of the sudden massive spill of 1.3 million litres of oil from a leaking underground pipeline.

The water in the bay is also polluted by untreated sewage from Greater Rio de Janeiro, which has a population of 12 million.“The oil industry is synonymous with the end: the end of fishing and the end of fish in Guanabara bay." -- Alexandre Anderson

Nevertheless, fish and fishing have survived, although the number of local fisherpersons has dropped around 60 percent since then, to 9,000 today, Anderson estimates.

The threat to their livelihood comes mainly from the shrinking of the space available for fishing, which covered 78 percent of the bay a few decades ago and currently is limited to just 12 percent, he said.

The activities of the oil industry’s plants, pipelines and tankers occupy 46 percent of the bay and that area is expanding, due to deepwater drilling in the Atlantic off the coast of Brazil, and the construction of a second refinery near the bay, set to begin operating in 2016.

“The oil industry is synonymous with the end: the end of fishing and the end of fish in Guanabara bay,” Anderson told IPS.

Besides narrowing the space available for fishing, the numerous pipelines that crisscross the bay change the environment. The oil is piped at high temperatures, to keep it liquid, while the natural gas is pumped cold, at dozens of degrees below zero.

Brazil’s state-run oil company, Petrobras, occupies islands in the bay with regasification plants of liquefied natural gas and stocks of oil and gas, supplied by oil and gas pipelines.

Marine life in the bay also suffers the effects of the sounds and vibrations caused by the pumping of tons of gas and oil at high pressure. “Imagine the impact of all of that on the seabed,” said Anderson.

The small-scale fishing community has fallen victim to the major economic transformation of the Rio de Janeiro metropolitan region. The economy of Rio, best known for its cultural activities, tourism and carnival, is now largely based on oil and the metalworking industry.

The oil deposits discovered in what is known as the “pre-salt” area, below a two-kilometre- thick salt layer under rock, sand and deep water some 300 km off the coast of Rio de Janeiro, have fuelled the recovery of shipyards that were practically inactive and have drawn large multinational engineering and oil services corporations to the area.

They also boosted the choice of Itaboraí, 60 km from Rio de Janeiro and near the northeast edge of Guanabara bay, for the construction of a petrochemical complex, COMPERJ, limited so far to a refinery with a capacity to handle 165,000 barrels a day.

On the other side of the bay, along whose banks the metropolitan region of 12 million people has grown up, Petrobras has been operating the Duque de Caxias refinery, which processes 242,000 barrels a day, since 1961.

“With the pre-salt deposits, Brazil will produce between 4.5 and 5.5 million barrels a day over the next 20 years, and will be able to export another two million, becoming a major oil exporter,” said Alexandre Szklo, a professor of energy planning at the Federal University of Rio de Janeiro.

The recent fall in international oil prices, of nearly 40 percent, does not modify that tendency, because in the current conditions in Brazil, “price swings only affect long-term expansion,” he said. “The oil industry is like an elephant – it takes it a while to start running and to brake.”

Brazil’s share of total global oil supplies might be small, only around five percent, but this country accounts for 60 percent of orders for drilling rigs and oil exploration and drilling systems, because almost all of its reserves are offshore, said Szklo.

It’s an opportunity to develop the naval industry and services for that sector, thus benefiting the economy of the state of Rio de Janeiro, off the coasts of which are the main pre-salt deposits, which also extend to other states to the north and south.

Brazil hopes to tap into this enormous source of wealth to improve its education and health systems over the coming decades. But some curses are inherent.

Because of its diversified production system, by contrast with Saudi Arabia, Russia and Venezuela, Brazil is protected from the main curse, which is sacrificing other sectors of the economy, especially processing industries, for an overvalued local currency and high dependency on oil exports, Szklo said.

But there is no denying that Rio de Janeiro suffers locally from Dutch Disease – an economic condition in which a nation’s economy becomes overly dependent on the export of natural resources.

“Oil production generates few jobs, but it provides work for highly-paid skilled workers who demand expensive services, driving up local costs, which debilitates other industrial sectors,” the professor explained.

On the outskirts of Campos, 280 km northeast of Rio de Janeiro, where large amounts of oil (not pre-salt) have been extracted in deep waters over the past three decades, the phenomenon helped destroy the local sugar industry and drove the cost of living up to the level of wealthy cities.

Rio de Janeiro is experiencing the same phenomenon, which has made it one of the most expensive cities in the world. The cost of housing in middle-class neighbourhoods has tripled in the last five years.

This explains the royalties charged by municipal and state governments in oil-producing areas, as a way to prepare for the future economic transition, after the oil reserves have been exhausted.

But it is the social and environmental curses whose repercussions are felt first and which generate the most resistance.

“The choice of location for the installation of COMPERJ was a bad one, between protected natural areas and a national park, threatening rivers that are still in good shape, and the last preserved area in Guanabara bay,” said biologist Breno Herrera.

He led a movement supported by local inhabitants, scientists and prosecutors which blocked the plans of Petrobras – the owner of COMPERJ – to turn the Guaxindiba river into a waterway for transporting heavy equipment to the petrochemical complex.

“The dredging could stir up heavy metals lying on the riverbed and pollute fish and people,” said Herrera.

The refinery will cause acid rain which could destroy forests and green areas in the mountains, towards which the wind blows, carrying pollutants produced by the processing of oil, said Herrera, the former head of a protected natural area jeopardised by the oil industry.

The Duque de Caxias refinery, “one of the worst sources of pollution in Guanabara bay, also pollutes the air in nearby neighbourhoods, causing respiratory diseases, allergies and red, itchy eyes,” said Sebastião Raulino, an activist with the Forum of People Affected by the Oil and Petrochemical Industry (FAPP).

Edited by Verónica Firme/Translated by Stephanie Wildes

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Shale Oil Threatens the High Prices Enjoyed by OPEChttp://www.ipsnews.net/2014/11/shale-oil-threatens-the-high-prices-enjoyed-by-opec/?utm_source=rss&utm_medium=rss&utm_campaign=shale-oil-threatens-the-high-prices-enjoyed-by-opec http://www.ipsnews.net/2014/11/shale-oil-threatens-the-high-prices-enjoyed-by-opec/#comments Wed, 26 Nov 2014 21:10:05 +0000 Humberto Marquez http://www.ipsnews.net/?p=137983 Ranking of recoverable shale oil and gas reserves, which have revolutionised the global map of fossil fuels. Credit: ProfesionalMovil

Ranking of recoverable shale oil and gas reserves, which have revolutionised the global map of fossil fuels. Credit: ProfesionalMovil

By Humberto Márquez
CARACAS, Nov 26 2014 (IPS)

Shale fever and the political chess among major oil producers and consumers have put OPEC in one of the most difficult junctures in its 54 years of history.

“OPEC was spoiled for several years by high prices of around 100 dollars a barrel,” Elie Habalián, a former Venezuelan OPEC (Organisation of the Petroleum Exporting Countries) governor, told IPS. “If it had had the foresight to keep prices down to around 70 dollars a barrel, shale oil would not have begun to pose such stiff competition.”

The 12-member group – made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela – may agree to cut output, which would entail sacrificing markets, during its Nov. 27 ministerial meeting in Vienna – the 166th held since the organisation was founded in September 1960.

Oil prices, which climbed after 2003 to over 140 dollars a barrel in 2008, plunged as a result of the global financial crisis that broke out that year, but recovered this decade and have remained at around 100 dollars a barrel.

In the meantime, the production of unconventional oil and gas began to expand in the United States. Shale, a common type of sedimentary rock made up largely of compacted silt and clay, is an unconventional source of natural gas and oil, which is trapped in shale formations and recovered by hydraulic fracturing or “fracking”.

“Fracking” involves pumping water, chemicals and sand at high pressure into the well, a technique that opens and extends fractures in the shale rock to release the natural gas and oil on a massive scale.

With the technology and capital available in the 20th century, these unconventional resources were not recoverable.

Habalián pointed out that after the 1973 Arab oil embargo, “the West and Japan adopted a strategy to achieve a stable market under their control rather than under that of the exporting countries.”

That strategy has run into surprises. For example, 40 years ago no one foresaw that China, along with India and other emerging powers, would become a fast-growing economy with a voracious appetite for fossil fuels, which gave a boost to producers of oil and gas.

“But with the high prices, while the exporters financed geopolitical campaigns, like the conflicts in the Middle East or the influence of Venezuela in Latin America under the presidency of Hugo Chávez (1999-2013), the big corporations were investing in technology and new areas of business,” said Habalián.

The shale boom “has merely accelerated the results of that permanent strategy by the West. Shale oil is here to stay, the price will drop as the technology advances, and that will bring down the prices of, and set a cap on, OPEC’s oil,” the expert said.

Map of proven global reserves of conventional oil, where new actors have also reduced OPEC’s grip. Credit: Fastcompany.com

Map of proven global reserves of conventional oil, where new actors have also reduced OPEC’s grip. Credit: Fastcompany.com

Fracking is a costly procedure that requires high crude prices to make it profitable. It is also criticised for its environmental effects, as it involves consumption of enormous amounts of water and the creation of cracks in the rocks deep below the surface, with consequences that have yet to be determined.

Shale oil is already a major actor in the global energy market, with daily output of 3.5 million barrels, mainly in the United States, which recently overtook Saudi Arabia and Russia to become the world’s largest oil producer, with more than nine million barrels a day.

For decades Saudi Arabia was the biggest producer and the de facto leader of OPEC, because to its production of nearly 10 million barrels a day is added a spare production capacity of two million barrels which has enabled it to increase or reduce output in periods of market scarcity or abundance.

The market, of some 91 million barrels consumed daily, of which OPEC contributes one-third, is showing signs of being oversupplied because of the rising offer of shale oil, Europe’s fragile economic recovery, and the slowdown of emerging economies, from China to Brazil.

Crude oil is about 30 percent cheaper than one year ago. The European benchmark North Sea Brent stands at 80 dollars a barrel, compared to 110 dollars a barrel at the close of 2013. The U.S. benchmark West Texas Intermediate is trading at 75 dollars a barrel, and Venezuela’s dense cocktail at less than 70 dollars a barrel, down from a high of more than 100 dollars a barrel.

Saudi Arabia “appears determined to respond aggressively in defence of its market share, even if that means lower prices for a few years,” Kenneth Ramírez, a professor of geopolitics and oil at the Central University of Venezuela, told IPS.

The Saudis are thus apparently facing off with Iran, their rival in the Islamic world – and which, like Venezuela, Russia or Nigeria, needs the biggest possible influx of revenue in the short term – and would discourage, with flows of low-cost conventional oil, the development of its big future rival: shale oil.

In addition, according to analyses like those of Habalián and Ramírez, low prices and a market with a greater supply of crude would “punish” nations like Syria or its big supporter, Russia, which is clashing with the West over the conflict centred in Ukraine.

In the immediate future, OPEC could opt for the Saudi proposal of maintaining the status quo and letting oil prices slide to 70 dollars a barrel or lower, with the aim of slowing down the development of shale oil while waiting for a recovery of Europe or China and other emerging economies.

Venezuela has tried to push another option, with an intense tour by Foreign Minister Rafael Ramírez to the capitals of oil producing countries, from Mexico City to Moscow through Tehran, but conspicuously avoiding Riyadh. The idea is to cut production to shore up prices, betting that the capacity to extract shale oil will decline in a few years.

One component that contributes to a move in that direction, said Habalián, is the pressure from environmentalists, especially in the United States and Canada, who oppose the extraction of shale oil and gas because of its impact on water sources, the injection of chemicals and the fracturing of rock deep underground.

A third option, said Ramírez, would be to ratify OPEC’s production ceiling of 30 million barrels a day, which would remove a small portion of the partners’ current excess supply “and although it would have a small impact on prices, it would send a signal that the organisation is not on the ropes.”

But in the medium to long term, Habalián observed, a new energy architecture in line with the market stability sought by the West continues to be bolstered, in the face of an OPEC strained by political and budgetary urgencies.

Editedo by Estrella Gutiérrez/Translated by Stephanie Wildes

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