An OPEC for Natural Gas: Born in South America?

As noted in Xinhua earlier this month, Bolivia, Argentina and Venezuela signed an accord to create the Organization of Gas Producing and Exporting Countries of South America (Opegasur), which is aimed at consolidating their energy alliance.

“…The three presidents inked the commitment memorandum for the exploration and exploitation of fossil fuels in the Bolivian provinces of Tarija, Chuquisaca (south) and Santa Cruz (east). They also vowed to make Tarija the main fossil fuel producer and the gas industrialization center within Opegasur’s framework.

… Morales and Chavez also signed an accord for a 600-million-U.S.-dollar investment in oil and natural gas exploration in a joint venture between the two countries’ state oil companies Bolivian Fiscal Oil Fields (YPFB) and Venezuelan Oil (PDVSA).

YPFB will hold 40 percent of the shares and will join in the exploration and exploitation in the South American Orinoco strip bloc in Venezuela. The two state oil companies will build a petrochemical plant and a thermoelectric plant in Entre Rios in the Bolivian region of Chapare.

They will also create the Petroandina Mixed Anonymous Society (SAM) to carry out projects for the exploration of hydrocarbons north of La Paz in Bolivia.

Also Friday, Morales and Kirchner signed a 450-million-dollar deal to build a gas-liquid separation plant in Tarija’s Gran Chaco province near the Argentine border, which will be the biggest in South America.

Some believe that this agreement could be a very nascent step on the way to creating an OPEC-style cartel for natural gas.  Of course, Venezuela’s president, Hugo Chavez, has been pushing for the creation of such an alliance at the international level for years now. The closest he has come until now was the quasi-formal Gas Exporting Countries Forum (GECF) which was founded in 2001. This new alliance fits Chavez’s plans for regional unification, plans which include the construction of a $23 billion 9,000 kilometer natural gas pipeline that would connect the entire continent.

While the idea of an international style cartel for natural gas may seem far-fetched, especially without the cooperation of Russia and Iran (who have both taken steps to create their own organization), this idea may ultimately turn out to be one of Chavez’s thoughts that bears closer watching in the medium- to long-term.

This entry was posted on Sunday, August 26th, 2007 at 3:50 am and is filed under Argentina, Bolivia, Bolivian Fiscal Oil Fields (YPFB), Iran, Petróleos de Venezuela, Russia, Venezuela.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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