Ideology vs profit; Colombia and Venezuela's trade dispute gets nasty

Economist Article --

Venezuela and Colombia -- Politics versus trade

Sep 10th 2009 | SAN ANTONIO DEL TÁCHIRA
From The Economist print edition
Hugo Chávez stamps out regional economic integration

BUSINESS is slack at José Nelson Uribe’s tiny grocery store in San Antonio del Táchira, just a stone’s throw from Venezuela’s border with Colombia. “I’m not selling even a quarter of what I sold before,” says Mr Uribe. His woes are a result of the political conflict between his namesake, Colombia’s president, Álvaro Uribe, and Venezuela’s Hugo Chávez. “Before” means before July 28th, when Mr Chávez declared a “freeze” on diplomatic ties and said he would seek alternatives to Colombian goods. This was officially a response to an agreement formalising American use of seven Colombian bases for anti-drug operations, but it also coincided with questions as to how anti-tank rocket-launchers sold by Sweden to the Venezuelan army ended up in a camp belonging to the FARC guerrillas in Colombia. It is not the first time that Mr Chávez has threatened trade sanctions, but this time he seems serious.

The impact on the border region was swift. For each country, the other is the second-biggest trading partner (after the United States in both cases). Bilateral trade totalled $7.2 billion last year, of which $6 billion consisted of Colombian exports, mainly of food, live animals, clothing and cars. Four-fifths of that trade passed along the twisting mountain road that links San Antonio with the state capital, San Cristóbal. “That represents 50,000 direct jobs and 250,000 indirect [ones],” says José Rozo, a local business leader. Many of these are in transport firms and customs agencies. “Before, the local lorry drivers were doing around 500 trips a day,” Mr Rozo says. “Now it’s down to about 80.” Industry in Táchira has been hit too, since many companies depended on imports from Colombia.

The border is not closed. But few of the 30,000 Colombians who used to cross each day to shop do so now, because Venezuela’s National Guard confiscates their goods when they recross the border, says Mr Uribe, the shopkeeper. Venezuela’s government has stopped issuing import permits, nor is it providing dollars at the official exchange rate for imports from Colombia (a dollar costs almost three times more on the parallel market)...

Click here to read the complete article from the Economist

Newswire: South-South / Emerging Market Cooperation

[China - ASEAN] - China to Boost Cooperation With Asean on Investments - Bloomberg

China wants to boost cooperation with members of the Association of Southeast Asian Nations to develop trade and increase investment, said Chinese Commerce Minister Chen Deming.


[ASEAN] - Five Asean Nations May Form Rice-Trade Body, Thai Official Says - Bloomberg

Five Southeast Asian nations may set up a rice-trade association next year to cooperate in stabilizing rice prices, a Thai official said.

Thailand, Vietnam, Cambodia, Laos and Myanmar will also cooperate on other issues related to food security and production, said Chiya Yimvilai, a spokesman at a meeting of Asean economic ministers in Bangkok. The countries would also work together on developing rice products, he said.


[Venezuela - Russia] - PDVSA, Russian Group to Start $30 Billion Oil Venture - Bloomberg

Petroleos de Venezuela SA and a group of Russian oil companies plan to spend $30 billion on a joint venture in Venezuela’s Orinoco region.

The 40-year venture will seek to produce crude in the Junin 6 area and may expand to other Orinoco blocks, Russian Deputy Prime Minister Igor Sechin told reporters in St. Petersburg today after meeting with Venezuelan Vice President Ramon Carrizalez. Russian investors will include OAO Gazprom, OAO Rosneft, OAO Lukoil, TNK-BP and OAO Surgutneftegaz. The venture will be signed “in the coming months,” Sechin said.


[Mexico - Uruguay] - Mexico/Uruguay sign strategic association accord and advance trade - MecroPress

Mexico president Felipe Calderón and Uruguay’s Tabare Vazquez signed on Friday in Montevideo a Strategic Association accord to strengthen political dialogue and bilateral trade relations in the framework of the 2004 free trade agreement.


[Mexico - Colombia - Venezuela - Ecuador] - Mexico offers to mediate between Colombia and Venezuela and Ecuador - MecroPress
Mexican president Felipe Calderón on an official visit to Colombia offered his country’s mediation in the conflict between Bogotá and neighbouring Ecuador and Venezuela.


[Peru - Brazil] - Brazilian President to visit Peru to strengthen strategic alliance - Andina
The next arrival to Lima of Brazilian President Luiz Inacio Lula da Silva will contribute to create a new strategic alliance to face Asian markets when signing several trade agreements, the President of Peru-Brazil Integration Chamber Miguel Vega Alvear.

“The arrival of Brazilian President will strengthen the progress achieved up to now in this Peru-Brazil strategic alliance and it will create a new stage in which both countries can face Asia-Pacific markets,”

As promised... China steps up overseas investments in commodities

Aug 14, 2009 -- State-owned Yanzhou Coal Mining Co. buys Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), reports Bloomberg

Aug 13, 2009 -- Sinochem Corp., China’s biggest chemicals trader, makes an offer to buy to buy Emerald Energy Plc for 532 million pounds ($881 million). Giving Sinochem Corp., access to oil fields in Syria and Colombia, reports Bloomberg

“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper. There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day." Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday.

How much of this map will be red when The Economist does a story on this in 20 years?

Oil and land rights in Peru -- Blood in the jungle

FOR seven weeks tens of thousands of Amazonian Indians blocked roads and rivers across eastern Peru. They seized hydroelectric plants and pumping stations on oil and gas pipelines to try to force the repeal of decrees facilitating oil exploration...

Weekend Newswire: Latin America

OAS can’t agree on Cuba, while Havana ridicules the organization
The task force created by the Organization of American States, OAS, in an attempt to bridge different members’ proposals to consider the readmission of Cuba seems to have stalled with the main actors clearly underlining their stance.


Colombia Cuts Benchmark Lending Rate to Record Low 5% to Stimulate Growth
Colombia’s central bank cut its benchmark interest rate to a record today and signaled it’s ready to lower it further in an effort to ward off an extended recession as inflation eases


Braskem Taps Peru, Venezuela in $3.6 Billion Expansion Outside of Brazil
Braskem SA, Latin America’s largest petrochemicals producer, plans to invest $2.5 billion in a polyethylene plant in Peru, said Cleantho de Paiva Leite, Braskem’s director of international projects.

Sao Paulo-based Braskem, which holds a 50 percent share of Brazil’s resins market, also is working on engineering studies for a $1.1 billion petrochemical plant in Venezuela with state- owned Pequiven SA, de Paiva said in an interview in Lima.


Venezuela Expropriations: Chávez Talks Himself into Trouble with Argentina's Fernández de Kirchner
The spark for the conversation sought by Fernández de Kirchner was a remark Chávez is reported to have made in private to Brazilian President Inacio Lula da Silva. That remark, it’s said, was to the effect that Venezuela was on course to take over foreign companies except for Brazilian ones.

President Hugo Chávez’ strategy of nationalizing companies including foreign ones, and a remark he did or did not make in seriousness to Brazilian President Ignacio Lula da Silva, appear to have posed problems for him and his Argentine friend and colleague, Cristina Fernández de Kirchner.

Chávez has depicted Fernández de Kirchner as an ally and soulmate in his bid to build a regional alliance to counter what he sees as the undue influence and power of the United States in Latin America. But his peremptory takeover of steelmaker Sidor and his tendency to talk off the top of his head may well have put her in between the proverbial rock and a hard place at home.


Argentina May Be Sanctioned By Manhattan Judge in Bondholder Litigation
Argentina may be sanctioned for failing to comply with a U.S. court order to turn over to bondholders documents regarding its pension funds, a federal judge in Manhattan said.

U.S. District Judge Thomas Griesa ruled in October that Argentine pension funds nationalized by that country’s government and held in the U.S. may be used to satisfy bondholder judgments against the republic. Argentina has appealed. Griesa later ordered the South American nation to turn over documents related to its pension funds to bondholders.


Argentina's Construction Activity Declined 5.5% in April From Year Earlier
Argentine construction activity fell the most in five months in April, as Argentines delayed investment plans amid the global financial crisis and political concern ahead of next month’s mid-term elections.


Mexico GDP to Sink Most Since 1932 in Fall `Hard to Fathom,' Goldman Says
Mexico’s economy will contract this year by the most since 1932 as a slump in the U.S. curbs demand for exports and slows dollar flows from tourism and remittances, Goldman Sachs Group Inc. said.

Corporacion Andina de Fomento Sells $1 Billion of 10-Year Notes

Corporacion Andina de Fomento sold $1 billion of 10-year notes, according to a person familiar with the transaction.

CAF sold the bonds to yield 4.5 percentage points above U.S. Treasuries, said the person, who declined to be identified.

[Source] -- Bloomberg

Newswire: Latin America

Latinamerica foreign trade forecasted to contract 9 to 11% in 2009
The main impact for Latinamerica of the global financial crisis and economic slowdown has been the contraction of trade, so far in the range of 9 to 11%, revealed Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latinamerica and the Caribbean, Cepal.

“The strongest impact we are seeing in the region is the fall in trade volumes. I believe that the “shock” of the contraction of global demand for our goods and services is our most relevant issue”, said Bárcena in an interview with the Cuban daily Granma.

She recalled that when the last big crisis Latinamerica’s foreign debt was equivalent to 24% of GDP, while in 2008 it had dropped to 8%.


Latinamerican Liberals hold congress in “Bolivarian” Venezuela
Liberal political parties and thinkers from Latinamerica are holding their annual congress this week in the Venezuelan capital Caracas. The event is in the framework of the 25th anniversary of the local branch Cedice-Libertad and will promote debates on liberal policies to address poverty and the current global slowdown.

...

The congress is bound to spark some reaction among President Chavez followers since his Bolivarian revolution and XXIst Socialism stand at the opposite end of the political spectrum from the Liberals and the concept of individual freedom.

The two events will be taking place during a particularly sensitive week since President Chavez has ordered the nationalization of oil industry subcontractors, banks, steel industry, food processors and farm land considered idle.


Foreign direct investment to Latam reached 139 billion USD in 2008
Direct foreign investments in Latinamerica and the Caribbean are showing a significant resistance to the global crisis and in 2008 reached a record 139 billion US dollars, up 9.4% from the previous year according the United Nations Conference on Trade and Development.


Latinamerica’s bicentennial independence festivities begin in Bolivia
Bolivia’s commemoration on Monday May 25th of the 200th anniversary of the first uprising in Latinamerica against the Spanish colonial empire will also mark the beginning of similar independence celebrations along the continent which will peak in 2010.


Third re-election running “inappropriate” admits Colombia’s Uribe
Colombia’s President Alvaro Uribe says it would be “inappropriate” for him to seek a third consecutive term. His statement comes two days after the Senate approved a referendum that would ask voters to permit him to run again. Uribe did not, however, clearly rule out a re-election bid.

The Bank of the South -- A step towards regional integration in South America

[South America Analysis] -- The significance of creating a new regional bank in South America.

** Note the opinions reflected in this article are my own and do not reflect any resource used in writing this analysis.



As high level Economy and Finance ministers from seven South American countries meet in Argentina with the goal of moving forward the creation of the Bank of the South (El Banco Sur), it is imperative to examine the bigger picture. I have synthesized two major points I would like to highlight.

1) South American countries are experimenting with new institutions. If found to be viable and efficient, these institutions can potentially form the building blocks of larger and more complex ones. The end result will be the promotion of legitimate regional integration in South America.

2) The Bank of the South, along with other efforts such as the Andean Development Corporation will provide South American countries first-hand experience in promoting economic development through South-South Cooperation. Development via this avenue takes advantage of the strengths and weaknesses of other developing countries to promote development from within. South-South Cooperation has great potential to create a new channel in which to promote sustainable economic growth and empower developing countries with the tools and means in which to help each other develop, thus cutting their reliance on external aid from wealthy donor countries or multi-lateral organizations such as the IMF (eventually).

The Bank of the South, which has been financed by the South American countries of Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela, will begin operations with an initial capital pool of $10 billion. This figure was agreed upon during the last meeting held in March in Caracas, Venezuela (MercoPress).

When you casually see hundreds of billions of dollars being thrown around in today’s headlines, it is easy to dismiss this $10 billion effort as menial, at best…

The real point however is not to rock the boat, the boat in this context being the International Monetary Fund (IMF) and other multilateral lending institutions. Hugo Chavez may be full of rhetoric that says otherwise, but as much as he would like the Bank of the South to counter the influence of the IMF, he knows at the moment it cannot.

Consider two major lending institutions—the IMF and the Inter-American Development Bank (IDB). Ideas are being floated around to increase IMF capital to $500 billion (see this BBC article). Granted not all this will go to Latin America, but no less this is a substantially larger capital pool than the Bank of the South will have. The IDB, which is a Latin America specific regional lender, has $101 billion of its own of capital.

However, if we look at one other regional lender—the Andean Development Corporation, which includes some of the remaining South American countries which are not participating in the Bank of the South (Peru, Chile and Colombia), has a capital pool of $5 billion. The Bank of the South, with seven founding members and $10 billion in capital to lend is a definite step forward for the region

Consider for a moment, the fact South American countries have not always been as successful as they are now at managing inflation, debt, budgets, political stability, etc. Today in 2009, South American countries have international reserves. Click here to access a great article with some straight forward data that illustrates this phenomenon from Victoria Saddi’s site, Brazil and Economics. In a few years the United States may have to add to their Chinese and Middle Eastern credit lines by opening up new ones with countries in Latin America.

Definitely not a good thing for U.S self-esteem, but that is another story all together. Discussion welcome for those who would like to share their opinions on the subject.

The Bank of the South will not tip the international balance of power in either the worlds of regional and or international lending institutions. It will however help create the foundation for future organizations and institutions which one day will rival the influence of first world institutions like the IMF.


~ Analysis by Bennett Reiss

Vice Prez, Joe Biden says "US moving towards new day in Latin America

La Nacion, a Buenos Aires based newspaper published a interesting op-ed piece today, which the Latin American Herald (access their article here).

Biden stressed the importance of the Progressive Governance conference which he is currently attending in Chile.

Joe Biden with a few South American heads of state

Biden also had the guts to acknowledge much like Hillary Clinton did in Mexico the other day that the United States must “do more” to reduce the demand for illegal drugs and stop the arms trade."

He congratulated “Mexico’s brave stand” against drug cartels and the “efforts” of Colombia to combat drugs, but warned that these “will have the secondary effect of pushing traffickers towards Central America.”

“The world economic crisis has affected almost everyone. Citizens of all countries are looking for answers, looking for hope, and for that they turn to their leaders. It is our duty, as partners, to listen to their plea and together forge the solution to a shared problem, explained Biden.”

China and Argentina Agree on Currency Swap --Update from IDB annual meeting in Colombia

March 30 (Bloomberg) -- The central banks of China and Argentina reached an agreement for a three-year, 70 billion yuan ($10 billion) currency swap, Chinese Central Bank Governor Zhou Xiaochuan told reporters in Medellin, Colombia, today.

It’s the first such accord between the world’s third- biggest economy and a Latin American nation. The move follows swap accords between China and Indonesia, South Korea, Hong Kong, Malaysia and Belarus.

The agreement broadens Argentina’s access to foreign- currency reserves and may ease concerns about the country’s ability to control the peso amid uncertainty over a conflict with farmers over export taxes and legislative elections scheduled for June 28. Argentina wasn’t part of a swap facility program created by the U.S. Federal Reserve for emerging markets, including Brazil and Mexico, last year.

Click here to access this full article from Bloomberg

Latin America hopeful for more Chinese investment

The Governor of the People's Bank of China, Zhou Xiaochuan was in Colombia this weekend rubbing shoulders with the head honchos of Latin America's governments, intellectuals and business leaders.

Chinese Central Bank Governor Zhou Xiaochuan
attends the Inter-American Development Bank (IDB)
meeting in Medellin, Colombia, March 28, 2009.
(Xinhua/David De La Paz)

Most major media outlets from North America and Europe picked up Zhou's pledge that China would actively support the International Monetary Fund (IMF) and other multilateral lending organizations such as the Inter-American Development Bank (IDB).

This naturally means China will want a legitimate voice in these institutions. Hopefully a Chinese voice will be for the better, not worse. Giving the Chinese a shot after all the foul-ups with U.S led efforts in the IMF shouldn't be too much to ask.

After reading through comments and quotes from various media reports on Zhou's speech, the consensus is clear. China plans on continuing the promotion of South-South Cooperation between developing nations—and is particularity optimistic about the prospects which lie ahead in regard to Sino-Latin American cooperation..

“South-South cooperation is all the more important amid the current financial crisis, and China will expand its trade with and increase its investment in Latin American countries after it joined the IDB, he said.”

"We see huge potential for economic ties and trade between Latin America and China," he said, noting that China has a free-trade pact with Chile, has concluded negotiations for such a pact with Peru and could have one with Costa Rica.

"The potential for China to make foreign direct investment in the region is huge," he said, adding that some sectors of special interest are in pharmaceuticals, computer software, aeronautics and biological products.

Trade between China and the greater Latin American region has been growing at an average rate of 40% in recent years and hit a record high of $143.3 billion in 2008 according to Xinhua News Media.

Zhou was in Colombia attending the 50th annual meeting of the IDB, which it joined in January this year.

Brazil's Embraer sells 24 combat planes to Ecuador

In another instance of South-South Cooperation, Brazil and Ecuador have just concluded a deal which makes Ecuador the proud owner of 24 Super Tucano combat planes.

The total cost of these 24 planes is unknown (Embaer did not comment), but we do know that Colombia paid $234.5 million usd for 25. The price is probably somewhere in that range, give or take a few million $'s thanks to fluctuating input costs and the typical Latin American favoritism.

Super Tucano combat planes fying in formation

The Super Tucano according to this article from the Latin American Herald is a turbo-prop, multi-purpose aircraft which is capable of carrying variety of conventional and smart weapons.

Ecuador has ordered the two-seat version of the plane in order to be able to also use it as a training air craft. Officials had the following to say.

“We’re very honored to expand our relationship with the government of Ecuador, a country that operates different models of Embraer aircraft,” the firm’s executive vice president for defense products, Orlando Jose Ferreira Neto, said in a statement announcing the deal.

“The Super Tucano is the ideal aircraft to execute patrol and training missions, and we are sure that it will fully meet the needs of the Ecuadorian air force,” he added.

Financially, Embaer like much of the rest of the Airline Industry (see this article from the Straits Times) has felt the pinch of the global down turn especially hard. Everything from orders of military craft to private jets are down. Overall depressing and continued negative market sentiment doesn't exactly help too much either.

The stock is down a lot, but as one of Brazil's prize jewels of innovation, success and EMPLOYMENT... Embaer is not going anywhere. The company has $1.2 billion usd in debt, BUT thankfully it also has $1.62 billion usd in cash sitting on the side lines.

This will both allow Embraer to make good on its debt obligations, keep its working paid to prevent civil unrest at production sites in Brazil and ultimately this emerging market company will emerge a little bit higher on the food chain of the new global economy.

Embraer (ERJ) - 2 year

South-South Cooperation Triangle -- Colombia, Peru & Brazil

BOGOTA -(Dow Jones)- Colombian state-controlled oil company Ecopetrol SA ( ECOPETROL.BO) said Tuesday it has agreed to buy stakes in two oil blocks in Peru from Brazilian oil company Petroleo Brasileiro SA (PBR).

In a statement, Ecopetrol said it bought 50% of a block in the eastern Peruvian Amazon jungle and 25% in a second one, located in the country's southeastern jungle.

Both companies will search for oil and gas in the two areas together. The acquisitions need to be approved by Peruvian authorities, Ecopetrol said.

Click here to read more from CNN Money ...

I know weird right??? CNN Money ran this story. Well I guess it was from Dow Jones originally hehe.

India -- Tata Motors a cool emerging company

New Delhi/Mumbai: The social networking era has become a great aid for the Tata Motors' Nano sale buzz to flourish in the online world. The Nano campaign, prior to its release, has been intensified through its extension to networking sites like Facebook and Orkutmaking the 'world's cheapest car' known to a larger mass.

The company targeted the online audience through its own portal, www.tatanano.com, but the networking sites triggered a gushy response with people from all over the world asking for a similar car in their land too, reports Mint. Darlene in Facebook said, "Please bring this car to Toronto, Canada!!!" while Luis recommends the manufacturer to make the car in Columbia. "You guys should make the Nano in Colombia since it would be a good place to produce them; we are in the middle of the American continent so it can be easily transported anywhere from Canada to Argentina at a lower cost," Luis said.

Click here to read more about this cool story.

Also... if you happen to be interested in Tata Motors (TTM), a company which happens to making a car which will cost between $2500-$3000 here's a bit from Yahoo Finance and how the ADR listed in the states has been performing.




TATA MOTORS LIMITED manufactures commercial and passenger vehicles primarily in India. It offers passenger cars; multi-utility vehicles; and light, medium, and heavy commercial vehicles, including mini-truck, light two-tonne truck, heavy dumpers, ... click here for more from Yahoo Finance

Might be a decent buying time for a company with a very attractive Div & Yield of 0.35 (8.90%).

Canada and Colombia -- Ecopetrol to purchase Enbridge stake in Ocensa pipeline

Colombia's state oil company Ecopetrol (NYSE: EC) will purchase a 24.7% stake held by Canada's Enbridge (NYSE: ENB) in the Ocensa pipeline in Colombia for US$418mn.

Ecopetrol's stake in the pipeline will increase to 60% as a result of the transaction, Ecopetrol said in a statement.



The transaction will strengthen Ecopetrol's position in the oil transport industry and allow it to increase output in the Eastern Plains region of Colombia.

BNAmericas

China-South America -- China pursues Latin America ties -- BBC Article

Two top Chinese officials have started visits to Latin America as part of an intensified effort to strengthen ties with the region.

Chinese Vice-Premier Hui Liangyu is to visit Argentina, Ecuador, Barbados and the Bahamas.

Vice-President Xi Jinping is visiting Jamaica, Colombia, Venezuela and China's two biggest trading partners in the region, Brazil and Mexico.

Click here to access the full article from BBC

South-South Cooperation: Andean Community (Comunidad Andina - CAN) to be modernized

Mincetur, Peru's Ministry of Commerce and Tourism announced that the country's of the Andean Community (Comunidad Andina - CAN) have plans to work together to redefine the community in order to promote a more modern and efficient environment for investment and trade.

The news comes on the heels of the upcoming meeting CAN is having with the European Union in regards to a FTA the two economic unions have in the works.

Bolivia which is also a member of CAN had previously been against the FTA agreement with the EU, but stated that it is open to negotiations and willing to compromise if certain changes are made.

If you would like to read more on this story and can read Spanish,
check out ---> this article published on Andina.com

Economics in play -- mixed messages from South American commodity producers

The current economic crisis has hit commodity producers in South America hard. All the talk about decoupling, booming domestic demand and well planned budgets will be tested as commodity exports plummet.

The big names in financial news (Reuters, Bloomberg, FT) reported this morning Brazil, Colombia and Chile have plans to sell bonds in international markets. All three of these economies depend heavily on revenue which is derived from commodity exports The recent tumble in commodity prices is not welcome news for these countries, which until just recently where some of the fastest growing emerging markets in the world.

Bloomberg LP reports Brazil will sell $1 billion of 10 year-notes, Colombia plans to raise what it calls a “benchmark offering” of roughly $500 million, and Chile has yet to release a figure on how much it will raise but its finance minister has confirmed it is very plausible the country will indeed issue its first foreign bonds since 2003 in order to help fun its fiscal stimulus plan.

(click here to access the full article from Bloomberg LP)

More bad news was released this morning when Brazil reported Industrial output dropped the most in 7 years. This is not a good sign. Internal demand from consumers in countries like Brazil and China remains high, but is not sufficient to keep these economies growing at the rates they have enjoyed during the past few years.

According to economists at Bloomberg, Brazil will expand at its slowest pace this year since 2003. Growth forecasts made by the Central Bank of Brazil are being cut in half for 2008 and economists are now predicting interest rate cuts later in January.

(click here to read more on this topic from Bloomberg LP)

One bit of good news comes from Braskem SA, Latin America's largest petrochemical company. It is currently in the midst of a 4-day rally in Sao Paulo trading. The gain comes as Peru announced plans to construct a new petrochemical plant in the southern port of Marcona.

Braskem, has been actively seeking natural gas and raw materials at competitive prices in South America. Peru has lined up $8 billion for its energy industry. Additionally, Braskem already had plans to build a plant in Peru that would be supplied by the Camisea gas fields.

(click here to access the full article from Bloomberg LP)

Recent developments in Peru seem to have bolstered investor confidence in the company which had previously been exploring natural gas investments in Bolivia and Venezuela. In both cases, there were various difficulties that emerged in working with the governments of Morales and Chavez. It seems, Braskem's new choice of opting to work in Peru is being interpreted by the market as the correct one.

I find it pretty interesting, that the mere construction of a Petrochemical plant in Peru, can turn the heads of investors and cause a petrochemical company trading in Brazil to go on a 4-day rally. It just shows how markets can move based on people's perception of regions they know little about.

I just hope investors realize that the rosy picture the international financial community paints of Peru may change if the government continues to fail at bringing prosperity the more remote regions of the country where much of Peru's raw materials are extracted from. For now though it seems the investors are content with Braskem's decision to avoid working with the left wing, anti-American regimes in Bolivia and Venezuela...

News Line: Energy in South America and China

Uruguay Opens bids for Offshore Oil, Gas Blocks – reports Uruguay Energy Ministry courtesy of Rigzone

On December 1-3, Uruguay Energy Ministry and ANCAP, the National Oil Company, will launch the offshore licensing round for exploration and exploitation of gas and oil. The blocks on offer, lie in the Punta del Este and Pelotas basins, where water depths range from 50 to 1500 meters, as well as another basin further offshore called Oriental Del Plata. The blocks' areas range from 2,500 to 10,000 square kilometers...

Click here to access the full story from Rigzone

PetroLatina Commences Drilling Colon-1, IDs 4 New Wells Sites in Colombia - reports PetroLatina courtesy of Rigzone

PetroLatina has announced a further operational update to that released on November 7, 2008.

La Paloma

The Company commenced drilling Colon-1, the first exploratory well to be drilled on the La Paloma block, located in Middle Magdalena Valley, Colombia, on Sunday, November 24, 2008. The Colon-1 well has been drilled vertically to a total depth of approximately 600 feet, to date. Drilling continues to be undertaken vertically to an expected total depth of approximately 9,072 feet in order to test the La Paz, Lisama and Umir formations. Drilling is scheduled to take 25 days in total at a cost of approximately $6 million...

Click here to access the full story from Rigzone


Petrobras' Platform P-53 Kicks Off Production at Marlim Leste Field – reports Petrobras courtesy of Rigzone

Petrobras announced that platform P-53 kicked-off its operations yesterday, November 30. This is the first production unit installed in the Marlim Leste field, in the Campos Basin.

The P-53 unit has total production capacity of 180,000 barrels per day of heavy oil, 20 degrees API, and compressing capacity up to 6 million cubic meters/day of natural gas. The platform's oil production will be offloaded to shore by shuttle tankers with the assistance of Autonomous Re-pumping Platform PRA-1 and the FSO Cidade de Macae. Part of the gas that is produced will be consumed by the platform itself as fuel to generate electricity, and the remaining will be exported to shore via the Campos Basin's gas network. The platform will reach peak production in the first half of 2010.

Click here to access the full story from Rigzone


Geopark Tests Positive Oil at Manekenk 1 in Chile – reports GeoPark Holdings Limited courtesy of Rigzone

GeoPark Holdings Limited has announced the successful testing of the new Manekenk 1 well on the Fell Block in Chile at an initial rate of approximately 1,300 barrels of oil per day equivalent (boepd). Geopark operates and owns a 100% working interest in the Fell Block...

Click here to access the full story from Rigzone


Peru's mining/hydrocarbons output rose 4.57% in Oct 2008 – reports Andina.com

Lima, Dec. 01 (ANDINA).- Production in Peru's mining and hydrocarbons sector expanded 4.57% in October from the same month last year, as the mining sub-sector increased 2.72%, the National Statistics Institute (INEI) said Monday...

Click here to access the full article from Andina.com


PetroChina Starts Developing Offshore Block in Bohai Bay – reports Dowjones Newswires courtesy of Rigzone

PetroChina Co. has started developing an offshore block in Bohai Bay with an output target of 3 million metric tons a year or 60,247 barrels a day, parent company China National Petroleum Corp. said Monday.

The Yuedong block, located in shallow water near Liaoning province, has rich reserves of heavy oil, CNPC said on its Web site, without elaborating.

Yuedong is part of the Liaohe field, China's largest heavy oil field, with annual output at 12 million tons a year or 240,986 barrels a day...

Click here to access the full article from Rigzone


China North East Petroleum's October Crude Oil Production up 135% - reports China North East Petroleum courtesy of Rigzone

China North East Petroleum has announced preliminary results for its October 2008 oil production.

Crude oil production for the month ended October 31, 2008 increased 135%, or 40,479 barrels, to 70,545 barrels from 30,066 barrels for the month ended October 31, 2007. On a sequential basis, crude oil production increased 4,627 barrels, or 7%, compared to the month ended September 30, 2008...

Click here to access the full article from Rigzone

South American Energy in focus

Venezuela's PdVSA Reports Successful Oil Drilling Ecuador

A slew of energy developments in a handful of countries in South America has made headlines in the past day or so. For starters Venezuela and Ecuador made headlines this morning once again... this time for successful drilling and exploration in the Amazonian region. The newly established supply of crude will eventually be sent to the new refinery being build on the pacific coast.

Click here to access the full story from Rigzone.



Petrobras' Production Soars 3.3% More in June

Petrobras’ average oil and natural gas production abroad was 218,117 barrels of oil equivalent per day (boed) in June, 8.1%.

Added to the volume lifted from the domestic fields, Petrobras’ total production in June set a monthly record, topping out at 2,421,155 barrels of oil equivalent, 3.3% more than a year ago and 2.3% higher than May 2008.

Click here to access the full story from Rigzone.



Arduous Process of getting the Camisea facilities in Peru up and running
- Wood Snag 3-Year Maintenance Contract for Camisea Facilities

The Camisea Project comprises the exploitation The San Martin and Cashiriari fields natural gas fields, the construction and operation of two pipelines, one for natural gas (NG) and one for natural gas liquids (NGL) and the distribution network for natural gas in Lima and Callao. The pipelines wiII make NG and NGL available for domestic consumption and for export.

Natural gas wiII be transported to the main consumption center in Lima, where it will be used for residential and industrial purposes and to generate electricity, that will then be distributed nationwide through Peru’s existing transmission infrastructure (click here to read more about the Camisea Project)

Wood Group Production Facilities has been awarded a three-year, performance-based contract by Pluspetrol Peru Corporation to provide integrated maintenance services for the Camisea facilities in Peru. The Camisea project includes the largest natural gas field in the region.

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Shell to invest $300m in search for oil and natural gas in Peru

Royal Dutch Shell is ready to invest as much as $300 million in exploring for oil and natural gas in Peruvian waters as part of a agreement with BPZ Energy, executives from the two companies said Thursday.

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In March, U.S.- and Peruvian-owned BPZ found an estimated 60 million barrels' worth of crude oil and 40 million cubic feet of natural gas in the same region off Peru's northern Pacific coast.

The accord announced Thursday calls for Shell to spend up to $300 million on exploration and - if reserves are found - exploitation of natural gas, while BPZ will put the same amount into searching for crude oil along with an additional $150 million to build an electric plant in the area.

Under the deal, BPZ will get 51.75 percent of any oil or gas produced and Shell will claim the rest.

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Geopark Grabs up Additional Petroleum Block in Chile

GeoPark Holdings Limited announced that the Ministry of Mining in Chile has awarded the Otway Block in southern Chile to a consortium consisting of GEOPARK (42%), Methanex Corporation of Canada (16%) and Wintershall Energia SA, a division of BASF Ag of Germany (42%).

The Otway Block is a large new attractive exploration area (5,992 square kilometers) located in the Magallanes region near GEOPARK's Fell Block operation in Chile. GEOPARK is the first and only private-sector oil and gas producer in Chile and the addition of the new Otway Block will further enhance GEOPARK's position as the premier private-sector oil and gas operator in Chile.

Click here to access a previous post in regard to GEOPARK's natural gas discoveries in the Magallanes Region -- published on South-South Cooperation on June 17th, 2008.

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Colombia to create oil price stabilization fund

Colombia's government is creating an oil price stabilization fund (FEPC) that will be used to cushion domestic oil prices from unexpected rises on international markets, government news agency SNE reported.

Congress has approved the fund, which is included in the national development plan and must go to the president for final authorization. The finance ministry would administer the fund, which would receive financing from the existing oil stabilization fund (FAEP) owned by state oil company Ecopetrol.

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