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Venezuela, Argentina Build South American Energy Integration

Venezuela President Hugo Chavez met with Argentine Planning Minister Julio De Vido last Monday in Caracas for discussions that saw the head of the Caribbean nation invite his South American allies to join in the oil exploitation of the largest crude reserves in the world.

The conversations focused on cooperation between the Venezuelan state oil company PDVSA and the recently re-nationalized Argentine firm YPF to explore and drill in the Orinoco Belt, home to nearly 300 billion barrels of crude.

“We are pleased to receive [the Argentine delegation] in the oil business... not just in the exploration and production of oil, but also in any other area that we may agree upon”, said Hugo Chavez during a press conference held outside the presidential palace of Miraflores.

YPF, originally an Argentine state energy company, was privatized in 1998 under pressure from the International Monetary Fund and sold to the Spanish firm Repsol.

Earlier this year, President Cristina Fernandez ordered the nationalization of the country’s largest energy company due to Repsol’s low production quotas and failure to maintain adequate reserves.

The new partnership between YPF and PDVSA, as explained by Chavez on Monday, would consist in the Argentine firm’s participation in the exploitation of mature fields in the Orinoco belt as well as PDVSA’s collaboration with energy projects in Argentine territory.

Venezuela signed a similar agreement with the public Argentine company Enarsa in January that establishes the production of 100,000 barrels of crude daily from the Orinoco Belt.

“Now we want YPF, with all of its force, potential and experience to participate in the Orinoco Oil Belt and oil fields that are already producing”, the head of the United Socialist Party of Venezuela said on Monday.

Mercosur: A New Horizon

During the press conference, Chavez took the opportunity to hail the entrance of Venezuela into the Common Market of the South (MERCOSUR) trade alliance that will take place on July 31.

The arrival of the Caribbean nation as a full member of MERCOSUR was decided after Paraguay, the only country objecting to Venezuela’s admittance to the bloc, was suspended from the organization following the “institutional coup” that deposed President Fernando Lugo last month.

Venezuela’s participation in the regional alliance, which currently includes Uruguay, Argentina, and Brazil, will, according to President Chavez, “open a new horizon of possibilities for the growth and aggrandizement of the South American Homeland”.

As such, the head of state reported that his country will create a $500 million fund to grant credits to private and public sector Venezuelan firms to facilitate their participation in trade deals with MERCOSUR associates.

A presidential commission has also been established to stimulate and streamline the OPEC member’s insertion in the bloc.

“We’re going to create a MERCOSUR fund and I want to take the opportunity to invite productive Venezuelan businesses from the private sector to come to the convocation of the [Presidential Commission].

A list of businesses is being made whose firms have the potential to be important exporters”, Chavez said. The two-time incumbent President informed that Venezuela expects to add 240,000 new jobs as a result of its admittance to MERCOSUR.

Published on Jul 27th 2012 at 5.10pm