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SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (April 14, 2009): YPFB corruption scandal widens with the arrest of the former hydrocarbons superintendent

April 14, 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.

Tuesday, April 14, 2009

BOLIVIA/YPFB CORRUPTION WOES

The corruption scandal, which forced YPFB President Santos Ramirez at the end of January to resign, has claimed another high-profile Bolivian energy official with the arrest of former energy regulator hydrocarbons superintendent, Guillermo Aruquipa, according to Hidrocarburosbolivia.com (see South American Energy Markets Daily Roundup, March 26 & 27, 2009). Auruquipa, who claims he is innocent, is allegedly linked to “irregularities” in the creation of YPFB-SIPSA, a shady company tied to Ramirez .  With 2009 being a heated election year in Bolivia and with the YPFB corruption scandal expanding, some analysts believe that the present climate of uncertainty will be a blow to long-overdue upstream investments by energy companies.

CORRECTION: ARGENTINA-BOLIVIA/GAS SUPPLIES

In a story published on Monday by La Nacion,  SAEM wrote that YPFB President Carlos Villegas and his Argentine counterpart, Federal Planning Minister Julio De Vido, had agreed on “up to 6.5 million cu m/day” of gas supplies to Argentina during Southern Hemisphere winter. Bolivian state-owned news agency ABI now claims that the meeting of the two officials in the eastern Bolivian city of Santa Cruz has been postponed to April 20. De Vido said that even though the meeting was supposed to take place on Monday, it was postponed to study further energy agreements between both countries. The postponement shows that both countries are pretty much in the dark on how to proceed. Some of these accords include the construction of the GNA gasline and a gas-processing plant in Rio Grande, eastern Bolivia.

BOLIVIA/ENERGY ROYALTIES

Owing to a fall in in global energy prices, Bolivian municipal association SIAM said that revenues from the IDH tax scheme, which was created under the new hydrocarbons law of 2005, would  retreat by 30%-40%, reports state-owned government new agency ABI. SIAM head Julio Linares said that the fall in IDH revenues will amount to 70 million bolivianos ($10.05 million/€7.6 million)/(Note: The ABI story speaks of “70 million bolivianos” while La Razon cites “700 million bolivianos“). Less IDH fund to the country’s 327 municipalities will undermine government-municipal relations.

REGIONAL/GASODUCTO DEL SUR

The $20-billion-plus Gasoducto del Sur pipeline, which aimed to transport 150 million cu m/day of gas from Venezuela to Brazil, Uruguay and Argentina, has been shelved indefinitely, according to Gazeta Mercantil/Reuters, quoting Brazilian Foreign Minister Celso Amorim. The Brazilian minister blamed the current economic downturn and the lack of funds for the shelving of the project.  Despite Amorim’s statements, SAEM alerted readers in 2007 that not only had Venezuelan President Hugo Chavez admitted that the project was impractical, but that it was a pipedream. Apart from the adverse environmental impact that such a pipeline would have on the Amazon Jungle, would it not be cheaper and more practical to build LNG regasification terminals? Another factor why Brazil is skeptical about the pipeline project is that it does not want to depend on its neighbors for energy, especially when there is a geopolitical component that would undermine its leadership in the region.

PARAGUAY/FUEL COSTS

Hydrocarbons poor Paraguay, which generates about $6 billion annually from exports, owes Venezuela’s PdVSA $270 million in fuel costs, according to Asuncion daily ABC Color. The daily alleges that the high cost of fuel paid by state-owned energy company Petropar hinges on giving a local shipping company, Naviera Conosur,  a concession directly by President Fernando Lugo, a Roman Catholic bishop who admitted on Monday that he had had an illegitimate child with a woman. ABC Digital alleges that in order to favor the owner of the shipping company, a friend of the president, a different supply scheme was used.  Even though Lugo, a member of the left-wing Patriotic Alliance for Change (APC), ended Colorado Party rule of Paraguayan politics for 61 years, corruption and the lack of government transparency continue to hound the country.

These briefs can be reprinted as long 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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