VENEZUELA: Integration, Oil Take Chavez to Southern Neighbours

By Marcela Valente Reprint | | Print |

Marcela Valente and Raul Pierri

BUENOS AIRES, Aug 11 2005 (IPS) - South American integration and oil industry cooperation were the central focuses of Venezuelan President Hugo Chávez’s brief visits to Uruguay and Argentina this week, aimed at forging strategic alliances.

On Thursday, Chávez and his Argentine counterpart Néstor Kirchner signed a contract for 240 million dollars in imports of diesel fuel from Venezuela to cover Argentine demand this year and next.

And on Wednesday, Chávez and Uruguayan President Tabaré Vázquez reached an ambitious agreement for the refining of Venezuelan oil in Uruguay.

Under the new deal, Venezuela’s state oil monopoly PDVSA will ship heavy crude from that country’s eastern Franja del Orinoco region, which has an estimated 360 billion barrels of reserves, to Montevideo on new oil tankers to be purchased from Argentina and Brazil.

In the Uruguayan capital, the oil will be refined by the state-run ANCAP refinery.

“This accord will guarantee Uruguay total coverage of oil supplies for the next 25 years,” said Vázquez.

In addition, under an already existing agreement, 75 percent of the oil that Uruguay purchases from Venezuela is to be paid within 90 days while the rest is payable in 15 years, with a two-year grace period.

Venezuela has agreed to provide oil on similar preferential terms to other countries as well, including Paraguay, Cuba, the Dominican Republic and Argentina.

The first shipment of one million barrels is already on its way to Montevideo and is scheduled to arrive next week, said Chávez.

Vázquez, who took office in March at the head of Uruguay’s leftist Broad Front government, underlined that the agreement would save Uruguay money on oil imports, because Venezuelan crude fetches just over 40 dollars a barrel compared to the U.S. West Texas Intermediate, which climbed above the 60 dollar per barrel mark this week.

Chávez explained that Uruguay would not pay for the first 40 million dollar shipment entirely in cash, but would cover part of the cost with long-term cooperation projects.

Venezuela also signed a number of scientific and technological cooperation agreements with Argentina Thursday.

The left-leaning leaders of Venezuela and Argentina adopted a 31-point declaration reaffirming their commitment to democracy and regional development and integration, their concern for poverty, and their intention to boost bilateral trade.

In addition, Chávez pledged to create a three million dollar fund for financing cooperatives, microenterprises and formerly bankrupt companies that have been “recuperated” by their workers in Argentina. The accord also ensures that these companies will be able to export their products to the Venezuelan market.

Chávez thanked Argentina for its contributions to improving Venezuela’s stockbreeding and agriculture industries through exports of livestock and farm machinery.

In the joint press conference offered by Chávez and Vázquez Wednesday, the Venezuelan leader said “We have learned the supreme need for South American unity. That is the main impulse that brought us here. We have agreed on the need to move swiftly and energetically towards strengthening and accelerating integration. The need for this has never been greater.”

Vázquez said regional unity must be based on concrete accords for integration in the areas of energy, finance, culture and communications.

The governments of Argentina and Uruguay, as well as Cuba, are partners of the Chávez administration in Telesur, a pan-Latin American satellite news station launched last month.

In July, Chávez also presented a proposal for the creation of a strategic alliance among state oil companies in the Andean region, which would be called PetroAndina, as well as Petrosur, an alliance with oil companies in the Southern Cone region.

And in June, Venezuela signed a pact with Cuba, the Dominican Republic, Suriname and 10 English-speaking Caribbean nations to create Petrocaribe, under which Caracas will sell 170,000 barrels a day to the region – including 98,000 to Havana – at discount prices.

At last month’s Mercosur (Southern Common Market) summit in Paraguay, Chávez proposed the creation of a South American “energy ring” which would include the construction of a pipeline from the gas fields in northeastern Venezuela to the Río de la Plata, the estuary that separates Argentina and Uruguay.

Venezuela also plans to invest 12 million dollars in a fuel alcohol plant in the northern Uruguayan city of Bella Unión, where the Vázquez administration has promised to help expand the sugar cane industry to generate jobs in that impoverished area, which was hit especially hard by the 2002 economic crisis.

The fuel alcohol or ethanol produced from sugar cane in Uruguay will thus contribute to Venezuela’s aim to increase the use of cleaner sources of energy.

Uruguay’s state-owned ANCAP, which also produces cement, committed itself to providing 100,000 tons a year of that product to the Venezuelan Housing Ministry, whose efforts to build low-cost dwellings have been stalled by a shortage of affordable cement.

“We are carrying out a gigantic housing plan,” said Chávez. “We want to transform around three million ‘ranchos’ (precarious shacks) into decent housing units. That means we need cement for the next 20 years.”

In Venezuela, the state-run cement company “was privatised, and they want to sell us the world’s most expensive cement,” he complained.

Chávez headed to Brazil Thursday, where he was to dine with President Luiz Inácio Lula da Silva.