Reshuffles to tackle energy shortages

By Veronica Sardon Jul 8, 2006, 12:15 GMT

Buenos Aires - Just two months after Bolivia nationalized its energy industry, the effects were still being felt around Latin America, with manoeuvres around the continent to address the high price of oil and Bolivia's demand for more money for its gas exports.

The Chilean Energy minister, Karen Poniachik, travelled to Buenos Aires to meet with her Argentine counterpart, Julio de Vido, to discuss possible variations around the natural gas that Argentina exports to Chile.

While Santiago demanded guarantees that its gas contracts with Buenos Aires will be honoured, Argentina is sought higher prices.

Poniachik was told Argentina's natural gas exports to Chile will be taxed and 12 different formulas will be used to calculate the new range of prices, news reports said.

Chilean officials hoped for a political gesture assuring there would be no interruption in the supply of natural gas and that the impact of the new prices would be minimal.

A new meeting is scheduled for next week in Santiago.

Last week, Argentina accepted a 47 per cent rise in the price on its imports from Bolivia. In exchange it obtained an increase in the amount of gas imported.

The government in Buenos Aires wants to tax more heavily exports by Argentinian companies to Brazil, Chile and Uruguay, in an effort to avoid effects of price increases on the internal market.

Argentina's supply of gas to Chile has been fluctuating according to the needs of the Argentine market, leading to long-standing tensions. The vital Chilean industries around copper and other forms of mining rely heavily on gas imports, as do residential consumers and electrical plants.

On a separate front, the Brazilian state company Petrobras will invest 500 million dollars in the oil industry in Ecuador until 2011, according to media reports in Quito - seen as an effort to cultivate new sources of energy outside of Bolivia.

Petrobras has apparently approved an investment of 160 million dollars in Ecuador for 2006. The Brazilian firm has already invested 460 million dollars in the Andean nation since it started its operations there in 1985.

Petrobras has signed a strategic alliance with the state company Petroecuador, which stipulates cooperation on exploitation, exploration, transport, stockbuilding, sales and other oil-related activities.

Nicaragua has in turn asked Venezuela to condone a debt burden of 30 million dollars so that the Caracas Agreement can be reactivated and Managua can buy oil under more favourable conditions, the Nicaraguan Foreign minister Norman Caldera said Friday.

Caldera said that his Venezuelan counterpart, Ali Rodriguez, promised to accept the request, when they both spoke about it at a recent meeting of the Organization of American States (OAS) in the Dominican Republic.

'We had a private conversation and the Venezuelan foreign minister vowed that they were going to condone this debt,' explained Caldera, who added that Caracas demands the payment of around 31 million dollars which Nicaragua argues have already been condoned through the HIPC (debt relief for highly indebted nations) initiative.

The presidents of Venezuela, Colombia and Panama - Hugo Chavez, Alvaro Uribe and Martin Torrijos - are to attend the celebratory kick off for construction on Saturday of the Colombian-Venezuelan gas pipe in the eastern Venezuelan state of Zulia.

The duct will link the Paraguana Refining Complex, in Venezuela's Falcon state, with the town of Punta Ballenas, in Colombia's La Guajira peninsula. In a visit to Panama in June, Chavez mentioned the possibility that that country could join the project.

   The duct will be completed in two years, and its cost of 230 million dollars will be covered by Venezuela. The Colombian Energy minister, Luis Ernesto Mejia, pointed out that Venezuela, despite the fact that it has the largest reserves of natural gas in the region, has a gas deficit in its western regions that will for now be covered with imports from La Guajira.

The project establishes the construction of another duct from Venezuela to Colombia's Pacific coast, in order to facilitate the export of oil to Asian countries.