Energy Integration: Backbone of South America’s Union

[T&T Venezuela Bolivarian Solidarity]

Today marks the end of a successful week for the Latin American integration after President Hugo Chávez’s visits to South American countries (Argentina, Uruguay, Ecuador and Bolivia), which started last Monday, August 6, come to an end.

This visit included a very tight work agenda, intense meetings and the endorsement of a wide and productive array of agreements whose foundation is embodied by the energy, economic and financial union of the five South American governments, which undoubtedly have bet for strengthening their natural, cultural and geographic ties.

Beyond those opinions opposing these initiatives, these peoples have become stronger; they are sure that the construction of the “Big Homeland” will be achieved by joining their efforts and wills in order to stop depending on global organizations holding the political and economic power.

Buenos Aires for integration

On august 6, President Chávez arrived in Buenos Aires, Argentina’s capital city, in order to meet with his counterpart, Néstor Kirchner, and review the bilateral agenda and widen the scope of the continental union.

At a ceremony held in the Casa Rosada, both heads of State signed four integration instruments: the Energy Security Treaty (TES, Spanish acronym), a memorandum of understanding, and two addenda of the Venezuela-Argentina Integrated Cooperation Agreement.

The TES is one of the proposals made during the South American Energy Summit held in Venezuela last April, when President Hugo Chávez proposed an Energy Treaty for South America allowing for facing the world’s current energy crisis.

This treaty’s goal is to develop a wide and sustained integration and cooperation process in the energy field; secure energy, complement primary energy sources, promote technological exchange to search new energy sources, develop an energy network, and foster the rational use of energy and energy efficiency.

In order to achieve this goal, Petrosureamerica (multi-state oil company) was created. This company will cover fields such as oil, gas, refining, and petrochemistry, as well as the development of transportation networks, storage, distribution, electricity, alternative energies and maritime transportation.

The agreement will allow PDVSA (Venezuela’s state-owned oil company) to have a share in the exploration of the San Jorge Gulf, located in the Argentinean Patagonia, and supply oil to the joint venture ENARSA-PDVSA.

Likewise, a memorandum of understanding provides for designing and building facilities for the regasification of Liquefied Natural Gas (LNG). PDVSA and ENARSA will build a regasification plant in Argentina through a binational committee. This committee will be in charge of creating a joint venture that will design and build the regasification plant.

This plant will be ready by 2009 and will supply 10 million cubic meters of liquefied gas to Argentina.

In addition, President Hugo Chávez reiterated his will to acquire or build a refinery in Argentina in order to process Venezuelan crude oil.

He made clear he prefers to refine oil in South America, thus favoring this region’s countries. Chávez recalled that most of oil exportations go to the United States.

“It is better to refine it here than taking it to the United States. The difference between an oil barrel and a refined oil barrel is US $20 per barrel; and the refining coast is about US $5; that is to say, a profit of US $15,” said the Venezuelan president.

He explained that the idea is to “refine it in our countries, so that profits, jobs, and technology stay in our countries.”

Chávez recalled that Venezuela has the world’s largest oil reserves, most of which are located in the Orinoco Oil Belt. He also assured that Venezuela’s gas potential “is incalculable.”

On that same day, they endorsed a Technical Cooperation Agreement between Venezuela’s CORPIVENSA and Argentina’s INTI. This agreement will provide for the joint participation in the project, construction, technological transfer and technical assistance in order to install 56 plants aimed at 21 different industrial sectors or production lines.

Likewise, the Venezuelan President also announced Venezuela’s financial help to Argentina through the acquisition of US $ 1,000 million in bonds. This help adds to previous acquisitions amounting to US $ 4,300 in the last three years.

“We are giving birth to a development model,” said President Chávez, who ´pointed out that results will be progressively achieved. “Venezuela and Argentina are inventing a new and effective integration mechanism, as well as economic, technological, productive and energy interdependence.

Argentinean President Néstor Kirchner thanked the Venezuelan President for this visit and acknowledged Venezuela’s support and solidarity with Argentina.

The Argentinean government also ratified its support to Venezuela’s full entry into MERCOSUR since the Argentinean Congress recently approved Venezuela’s request to join this bloc, created in 1991 by Argentina, Brazil, Paraguay and Uruguay.

Before leaving Argentina, President Chávez reiterated its interest in contributing to Colombia’s conflict. He also appointed former Venezuelan Foreign Minister Roy Chaderton as the new Venezuelan ambassador to Mexico.

Montevideo: Beyond South, but Closer to ALBA

On August 7, the Venezuelan president arrived in Montevideo, Uruguay’s capital city, where he met with the Uruguayan President Tabaré Vázquez.

On August 8, both presidents signed a Joint Declaration and three memoranda of understanding in the energy field involving PDVSA and its Uruguayan counterpart ANCAP.

The Energy Security Treatment involves the participation of ANCAP and PDVSA, which also endorsed a memorandum of understanding to exploit and transform heavy hydrocarbons. ANCAP and PDVSA will work together in an oil refining project including improvements for La Teja refinery; which will produce 100,000 bpd of oil by-products.

Oil will be extracted from the Orinoco Oil belt and will be processed in La Teja.

The second memorandum of understanding involves the acquisition of a 10% share in ANCAP, thus increasing Venezuela’s participation to 25% in the Uruguayan company.

Another document provides for the distribution of oil coke in order to boost the production of cement and construction materials in Venezuela.

Uruguay and Venezuela ratify their interest in working together in order to achieve integration without hegemonies and particular interests. Likewise, they endorsed a Joint Declaration and agreed that Venezuela’s entry into MERCOSUR is a sample of this unifying project’s scope.

In order to follow up the progress and guarantee the achievements of goals, a Joint Binational Commission will meet next August 30 and 31 in Caracas.

According to President Chávez, this is “an integrated treaty allowing us to tell the Uruguayan people they should not worry because Venezuela is committed to supply all the energy they will need in this century; that’s something historic.”

The Venezuelan president explained the Bolivarian Alternative for the Peoples of America (ALBA) to his Uruguayan counterpart. Likewise, he mentioned that Vázquez ask him to invite Uruguay to ALBA meetings.

Regarding the ALBA, Chávez stressed achievements such as funds granted to reactivate some Uruguayan companies such as FUNSA, URUVEN and ENVIDRIO.


These cooperation initiatives join the ALBA’s principles: solidarity, cooperation and interdependence.

“The Uruguayan government is very willing to accept Venezuela’s incorporation into MERCOSUR,” said President Tabaré Vázquez. “Venezuela is a fundamental actor for the region,” he added.

“Just as Venezuelans needs to enter MERCOSUR, I also think that MERCOSUR need to grow by changing (…). We are waiting for the Brazilian and Paraguayan Parliaments,” said President Chávez, who denied claims that he has given an ultimatum to both Parliaments so that they approve Venezuela’s incorporation.

“It’s a big campaign conducted by the North, but he peoples have to know the truth: the United States does not want Venezuela to join MERCOSUR; it does not want Venezuela to join the Caribbean; it does not want Venezuela to join anybody, but it has failed and it will fail,” stressed Chávez.

Quito: A city with height and thirsty of union

On Wednesday 8, President Chávez traveled to Quito, Ecuador, the third country of the tour characterized by a wide welcome offered by President Rafael Correa. They paid homage to the Marshal of Ayacucho, Antonio José de Sucre, accompanied by the Bolivian people.

Thousands of Bolivian people welcomed the Venezuelan president and expressed their support to the initiatives such as the International Mission Miracle. More than 2,500 people have been operated from different eye diseases and have totally recovered thanks to the assistance provided by Venezuela.

A branch of the Social Development Bank (BANDES, Spanish acronym) was also inaugurated in Quito, said the President of BANDES, Rafael Isea. According to President Chávez, the new opening represents an excellent opportunity to grant micro-credits to the small and medium industry.

Presidents Chávez and Correa endorsed some agreements in Carondelet Palace, venue of the Ecuadorian government.

Several energy agreements were signed: the Energy Security Treaty and two memoranda of understanding aimed at the construction of a refining complex in the Province of Manabí (South West, Pacific coast) and the integrated rehabilitation of the installations and the production’s optimization of Campo Maduro de Sacha, with capacity for 43,000 bpd.

The goal is to modernize and improve the Ecuadorian oil industry which is a traditional oil exporter with structural problems to process by-products; this is why it depends on fuel import, thus generating low incomes in its final balances.

The distiller will be the biggest of the South American Pacific, it will process 300,000 bpd and the investment amounts to $ 5 million, so the state energy companies of the region are invited to participate in the financing.

PDVSA and PETROECUADOR will explore an oil field in the Amazonian region with reserves of 1,000 million bpd which demand an investment of $ 5 millions and it would generate $700 million per year.

Among the agreements signed, there is one to bring two drills to Ecuador : the first one will arrive in October and the second one in November.

“It’s nothing for us. We just have to make a reengineering of the drills that we have and the ones to arrive,” President Chávez stated.

One of the drills is part of three that operate in Venezuela and the other one will arrive from China.

President Chávez ratified the Venezuelan support to Ecuador so it must integrate OPEC again. They retired in 1992. “I think it is an extraordinary project, we must keep together in joint investments and technology.”

He also mentioned the need of boosting other union proposals such as the South University, PETROSUR, and the Bank of the South. Venezuela is ready to invest part of its international reserves: $ 30,000 million, if the project is achieved.

He pointed out that “the tour was successful and the energy projects represent the base of the South American union,” he said.

President Chávez insisted that the U.S. will keep on “telling lies in order to blackmail the peoples, confusing them everywhere. It is important to understand it.” This behavior is characteristic of “a powerful contender,” so it is imperative “to move forward firmly and fast in order to make people understand the necessity of these alliances.

When he was asked about RCTV during a press conference, the Venezuelan Head of State recalled that his country lives the widest freedom of expression: “RCTV participated actively in the coup d’État,” and admitted having made “a great mistake” because of forgiving such a fault.”

He recalled that two months after the coup “the attacked again and we allowed them to do it again.” We had an extremely weak State. Later on, the Bolivarian government did not renew the license.

Another of the announcements made by Venezuela was the purchase of USD 100 million in Bolivian debt bonds and the possible return to the Andean Community of Nations (CAN Spanish acronym)

The return of Venezuela to the CAN “is not impossible, but certain things must be done, for instance, the stop of negotiations about the endorsement of the Free Trade Area of the Americas – FTAA by the member countries. We have to wait for a meeting in this sense,” he said.

“If these treaties were stopped or cancelled, the reason for our retirement will be over”, he added.

La Paz: Cold with Bolivarian heat inside


After leaving Ecuador, President Chávez traveled to Bolivia where he inked, together with his counterpart Evo Morales, the constitution of a joint company PETROANDINA, through YPFB and PDVSA.

This important agreement, where Bolivia owns 60% and Venezuela 40%, was endorsed at a protocol ceremony held in the Central patio of Palacio Quemado, headquarters of the Bolivian government.

“It’s time for our full and real independence since we all are a homeland,” President Chávez said.

Then, he traveled to Tarija (South of Bolivia) where he held a meeting with Presidents Néstor Kirchner and Evo Morales. They signed the Tarija Agreement which is aimed at the integration of South American Gas Exporting-Producing Country Organization (OPEGASUR Spanish acronym).

During his speech in Tarija, the Bolivarian leader stressed the importance of convincing “our people” that South America is one nation and we must build the Great Homeland.

With this Presidential tour, Hugo Chávez ratifies again his will to consolidate the union by cooperation and solidarity among sister countries. We can only say that we are independent, the day we build the Great Homeland,” he added.