Morales, Chavez Sign Energy Integration Accords
Bolivia's President Evo Morales signed eight accords with his Venezuelan counterpart Hugo Chavez on Monday, two of which are designed to promote energy integration between the nations, according to statements by Bolivia's government news service ABI and Venezuela's state oil company PDVSA.
The first such agreement, the Caracas energy cooperation agreement (ACEC), establishes the supply up to 200,000 barrels of Venezuelan crude, diesel and liquefied petroleum gas (LPG) per month in exchange for 200,000 tons of Bolivian soy and 20,000t of poultry, ABI reported.
The diesel imports, which will be worth about US$120mn-150mn a year, will allow Bolivia's government to cut the US$100mn it pays out in annual subsidies for the fuel, the statements said.
The export of foodstuffs will also provide a market for rural Bolivian farmers, ABI said.
A second energy accord, the energy sector cooperation agreement, establishes the basis for technical and operational collaboration between the two countries.
Venezuela will offer Bolivia advice on its domestic gas usage as well as assistance in restructuring Bolivia's state oil firm YPFB and the accord includes a provision for PDVSA and YPFB joint ventures, the PDVSA statement said.
"The main priority is developing in-house expertise. Down the road it gives [YPFB] more freedom to pick and choose what kind of investors to bring and also renegotiate those [exploration and production] contracts," Chris Garman, a Bolivia analyst with US-based political risk advisory and consulting firm Eurasia Group, told BNamericas.
"[Morales] has to engage in certain partnerships with other foreign companies to be able to inject expertise, capital and know-how. I think this is going to be a medium-term project, this is not something you can conduct overnight. Ultimately I think there will be an emphasis on PDVSA and maybe other state-owned companies outside the US or Europe," Garman said.
Bolivia's lack of capital and physical assets as well as its lesser geological appeal compared to Venezuela, will make it difficult for YPFB to follow a business model similar to that of PDVSA, Patrick Estereuelas, a Venezuela analyst from Eurasia, told BNamericas.
"The state, of course, will try to have YPFB play an important role in pricing and distribution, but YPFB may not necessarily be able to exercise a majority equity stake in any future projects because they won't be able to provide any capital of their own," Estereuelas said.
The second accord will promote regional integration in the oil, gas, electricity and petrochemicals sectors as well as contribute to the consolidation of the Petrosur and Petroamerica energy integration initiatives, the PDVSA statement said.
Brazil, Venezuela, Argentina and Bolivia have agreed to support Chavez's Petrosur initiative to integrate the energy resources of Venezuela and Southern Cone nations.
However, Brazil's federal energy company Petrobras (NYSE: PBR) "is unlikely to join Petrosur, which leaves PDVSA essentially with two partners that have very little available capital of their own and have only just begun: in the case of [Argentine state power firm] Enarsa, just begun from scratch, and in the case of YPFB, once again beginning from scratch," Estereuelas said.
"By bankrolling Enarsa, which [PDVSA] has been doing over the course of the last two years, and helping YPFB get back on its own two feet, the fortunes of Petrosur or the appeal of Petrosur become a little stronger, a little bit more attractive," he added.
About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.
Operates 14 Offshore Rigs
Manages 26 Offshore Rigs
- Union Leader: PDVSA's Amuay Refinery Halts Distillation Unit (Nov 30)
- Venezuela's PDVSA To Tap Oil Customers To Pay $449MM To ONGC (Nov 15)
- Venezuelan Oil Output Heads to 29-Year Low as Cash Crunch Grows (Nov 10)
Company: Petroamerica more info
- Petroamerica Updates Testing Results from Colombia Well (Apr 09)
- Drilling Commenced at Pacific Rubiales' Colombia Well (Jul 11)
- Petroamerica to Farm-Out Los Ocarros Block (Jul 05)