MercoPress. South Atlantic News Agency

A panacea for SA's energy problems?

Brazil and Venezuela agreed to forge ahead with two joint ventures between their state-run oil companies and a natural gas pipeline that would stretch across the Amazon rainforest.

President Luiz Inácio Lula da Silva and Venezuela's Hugo Chávez on Thursday signed a series of accords to speed the projects that had been agreed upon earlier but had gotten bogged down in bureaucracy. "We intend to sign the contracts in December in Caracas," Silva said. "With these partnerships we are showing that South America can resolve its energy problems." Outlining the joint ventures between state oil companies, Chàvez said one company would operate Carabobo I, an extra-heavy oil field in Venezuela's Orinoco Basin. Petróleos de Venezuela SA, or PdVSA, will provide 60 percent of the capital for the Carabobo project, with the remainder coming from Petróleo Brasileiro SA, or Petrobras. Another company would operate an oil refinery in the Brazilian state of Pernambuco with 60 percent of the capital coming from Petrobras and 40 percent from PdVSA. In December 2005, Silva and Chávez laid the refinery's cornerstone but cooperation between the two companies stalled and Petrobras recently began talking about building it without Venezuelan help. Chávez called the projects "the nerve of (South American) integration," adding that they would "shield (Silva) from an energy crisis." Earlier in the day, Chávez said Venezuela wanted to share its immense reserves of crude oil and natural gas with Brazil and other countries in the region because "the world was entering an energy crisis" and that Brazil only had enough natural gas reserves to last 10 more years. Silva also said they would soon select a company to develop a project for a natural gas pipeline from Venezuela to Brazil's northeast. Silva also said he would work to assure that Brazil's Congress would ratify Venezuela as a full member of the Southern Cone Common Market, or Mercosur. The two leaders are opponents of US-backed efforts for a Free Trade Area of the Americas that would stretch from Canada to Chile. But Venezuela's bid to join Mercosur is encountering resistance from lawmakers in Brazil who must ratify the expansion. So far, Argentina and Uruguay have ratified Venezuela's entry in the group while Brazil and Paraguay have not.