Friday, September 30, 2005

Venezuela's Chavez Expands Oil Initiative

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Venezuela's Chavez Expands Oil Initiative

The Associated Press
Thursday, September 29, 2005; 3:50 PM

CARACAS, Venezuela -- President Hugo Chavez said Thursday he wants to share his country's oil wealth with every nation in South America, in a move that aims to strengthen alliances in the region on the back of surging energy prices.

Chavez, a close ally of Cuban leader Fidel Castro, said his country had enough resources to help the region for generations to come.

"With this mission of energy integration, Venezuela guarantees petroleum and gas for the South American continent for at least 200 years," Chavez said as he arrived for a South American summit in Brazil's capital of Brasilia.

Venezuela's "Petroamerica" initiative is a rival to the U.S.-backed Free Trade Area of the Americas. It integrates previous oil projects Petrosur, Petrocaribe and Petroandina, under which Venezuela agreed to sell fuel to other countries in the region on preferential terms.

Chavez has said the energy alliances will challenge U.S. economic domination in the region, and distribute fuel directly to avoid costly intermediaries.

Venezuela and Brazil will jointly exploit oil in the Orinoco tar belt, Chavez said, and further deals are planned with Argentina and Uruguay. Officials also announced Thursday that Brazil and Venezuela had agreed to share the cost of building a new $2.5 billion refinery in northeastern Brazil to process up to 200,000 barrels of crude a day.

Few specifics of future deals under the Petroamerica initiative have been announced, but some of its aims include stepping up refining capacity and promoting joint exploitation of oil and natural gas.

"Everyone on the continent is looking with a lot of interest," said Santiago Chavez, a trade official from Ecuador's embassy in Venezuela, after energy ministers from 12 South American countries signed a declaration in Caracas on Monday pledging to pursue the Petroamerica initiative.

In June, Chavez signed the Petrocaribe deal with 13 Caribbean countries to sell 190,000 barrels of fuel a day under terms that are expected to save them millions of dollars.

Eleven of those countries have since signed more specific deals allowing them to pay only a portion of their debt up front and finance the rest over 25 years at low interest rates. Venezuela has also said they can pay some debts with goods such as rice, bananas or sugar.

Some have accused Chavez of taking advantage of a tight oil market to buy political alliances.

"Who doesn't do that?" asked Professor Mazhar al Shereidah, an oil expert at Central University of Venezuela. "Why would it (Venezuela) lose this opportunity?"

© 2005 The Associated Press


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