Energy integration efforts struggle in Latin America
11 June 2009 (Platts Oilgram News)
Increasing production of renewable energy and tying it—as well as more traditional energy projects such as natural gas pipelines—together throughout Latin America face economic and political stumbling blocks, representatives of multilateral organizations said June 9.
"A sense of caution has replaced the euphoria we were seeing two years ago" about renewable energy including wind, solar and biofuels, Inter-American Development Bank President Luis Moreno said at a conference on energy in the western hemisphere organized by the Institute of the Americas.
The global economic crisis and weak oil and other fuel prices have caused some Latin American countries to pull back on politically unpopular or expensive energy initiatives. Still, Moreno said some projections show Latin America could see $1.3 trillion in both private and state investment in the energy sector over the next 20 years.
Many projects—whether flowing gas through international pipelines or moving solar or wind energy between countries on interconnected electrical grids—have stalled, Moreno said.
Andean Development Corporation Executive Vice President Luis Berrizbeitia agreed, saying "broad-based integration processes have become weaker in the past few years" in Latin America.
He noted that several gas pipeline projects between countries have been replaced by national LNG terminals, which allow countries to bring in gas supplies from numerous producers and support security of supply.
Argentina, Brazil and Chile are among the countries that have looked to LNG in the face of unreliable gas supply from Bolivia, where political instability has led to a decline in new investments in gas production.
Jeffrey Davidow, president of the Institute of the Americas, said politics and not technical issues are still the main barriers to integration. While he noted that Colombia and Venezuela have had some success in integrating gas pipelines and electrical grids are coming together in Central America, the overall results are still poor.
Colombia's ambassador to the US, Carolina Barco, however, insisted that her country is still pushing to connect with its neighbors through new gas and coal opportunities, the integration of biofuel production, the possibility of gas pipelines toward its Pacific coast and investment in hydropower projects.
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The forum, which was organized by the Office of Public Affairs at the U.S. Embassy in Venezuela, focused on the geopolitics of energy and energy security in the United States and Latin America.
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Quotes Jeremy Martin
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2008 was a bad year for PEMEX, but the future holds promise for the company, according to Director General Jesus Reyes Heroles, who spoke at the Institute of the Americas energy roundtable in Mexico City on February 3.
For Reyes Heroles the ‘bad’ was precipitated by the significant decline of the country’s oil production, particularly at the massive Cantarell field: 2008 saw oil production drop 9% to a 13 year low.
Reyes Heroles was quick to state that 2009 provided PEMEX and Mexico’s oil outlook with a proverbial new leaf. In speaking of the opportunity that the reform measures afford PEMEX, he emphasized that he prefers the current ‘day after tomorrow’ from the alternative of no reform which he noted was a real possibility as the debate dragged on last year.
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Chávez Reopens
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In recent weeks, Venezuelan officials have solicited bids from some of the largest Western oil companies, including Chevron, Royal Dutch/Shell and Total of France and promised them access to some of the world's largest petroleum reserves.
"If re-engaging with foreign oil companies is necessary to his political survival, then Chávez will do it," said Roger Tissot, an authority on Venezuela's oil industry who is a visiting energy fellow at the Institute of the Americas.
To read the complete story by New York Times correspondent Simon Romero, click here
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Energy Specialist Joins IOA Program
Roger Tissot, an internationally renowned energy analyst, is joining the Institute of the Americas as a Visiting Energy Fellow. He will write policy papers and articles for the Institute, participate as a speaker in Institute programs, and work with the Energy Program on its conferences and roundtables.
For almost 15 years, Roger has focused his research on Latin American economic, political and energy issues, most recently as a director at Washington, DC-based PFC Energy. He also spent several years in Latin America with EnCana Corporation. Roger holds an M.A. in Economics from the University of Laval (Quebec) and an M.B.A. from the University of Calgary. He lives in Canada and can be reached at:
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