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SOUTH AMERICAN ENERGY DAILY ROUNDUP (March 30, 2009): Study shows that Venezuela spent regionally $220 million petrodollars during 2005-09

March 30, 2009

South America Energy Markets (SAEM) will begin a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. I aim to publish SAEM Daily Roundup from Monday through Friday by noon London time.

March 30, 2009

VENEZUELA – PETRODOLLAR AID

Hydrocarbons-rich Venezuela has spent at least $220 billion of its oil earnings on 14 countries during 2005-09, according to Lima-based El Comercio citing a study by the Mexican Centro de Investigaciones Economicas (CIECA). The study claims that the biggest recipients of Venezuelan petrodollars were Russia ($34.485 billion) and Cuba ($24.721 billion).  Venezuela has also helped Argentina by purchasing $5 billion of its debt, according to CIECA. State-owned energy company PdVSA also grants 689,000 barrels of oil/day to Latin American and Caribbean countries payable with long-term soft credits. President Hugo Chavez’s government faces today difficult economic times due to plummeted global oil prices (see South American Energy Markets  Daily Roundup, March 26 & 27, 2009).

BOLIVIA – UPSTREAM WOES

Hydrocarbons Minister Oscar Coca paid a visit to a number of oil fields in the eastern Bolivian department of Santa Cruz to reiterate the government’s demand that energy companies must respect investment pledges, reports state-owned news agency ABI. “I am carrying out an inspection to ensure that the energy companies fulfill their investment pledges,” he said. Some analysts believe that if investments totaled last year a mere $300 million, or 30% of total investment pledges, 2009 will turn out to be another disappointing year. Bolivia has lost foreign gas markets due to uncertainty over upstream investments.

BOLIVIA – STATE FINANCES

Lower energy prices as well as falling demand for gas from Brazil will force Bolivia’s energy export earnings to drop by 20%-30% in 2009 from about $3 billion last year, according to Alvaro Rios, an analyst at Porto Alegre-based GasEnergy, quoted in Santa Cruz daily El Mundo. The analyst said that with respect to Brazil and Argentina, the price of gas has fallen in the first quarter of the year from $8/MMBtu to $6/MMBtu and would continue to retreat in the second quarter to $4-$4.50/MMBtu. Gas prices with Brazil and Argentina are reviewed on a quarterly basis.

ECUADOR – PETROECUADOR WOES

The 16-month intervention by the navy of state-owned energy company, Petroecuador, has proved a failure, reports Guayaquil-based daily El Universo.  One of the aims of the navy was to bolster efficiency of the energy company especially in the area of management. “Such plans, acknowledges the president of the company, Admiral Luis Jaramillo, have not even reached the first phase [out of three to 2012 of the plan],” according to the daily. The navy intervened in the company after violent protests by workers forced daily oil output to decline to 139,000 from 175,000 barrels per day.

ARGENTINA – DEREGULATION

Attending a presidential summit of liberal and left-wing heads of state in Vina del Mar in Chile, Argentine President Cristina Fernandez defended state intervention of local market, according to Buenos Aires business daily El Cronista. She said that Argentina was “one of the countries that experimented with greatest enthusiasm deregulation” in the 1990s by playing down the role of the state. With economic matters and state coffers shrinking at an alarming rate in Argentina due to a sharp downturn in economic growth, it is no surprise why some analysts see state intervention growing this year in the country’s energy markets.

UNITED STATES – REGIONAL FOREIGN POLICY

Vice President Joe Biden said at a presidential summit of liberal and left-wing heads of state in Chile that President Barak Obama wants to strengthen his ties with Latin America and was ready to “hold talks and form alliances,” reports Montevideo daily El Pais. Biden mentioned the important tole of the United States and Latin America in the fight against the illicit drug trade. Even though former President George W. Bush’s unileteral foreign policy and human rights violations caused a lot of harm to the country’s standing in the international political arena, Latin America played a minor role in the so-called war on terror. Will the region continue to be seen by Washington as its backyard? If it does not pose a geopoltical threat to the United States’s national security, Latin America will continue to rank at the low end of Washington’s priorities.

These briefs can be reprinted as long as as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.

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