South American leaders mull energy policy at Chavez summit

Margarita Island, Venezuela (Platts)--18Apr2007

The leaders of South America's 12 nations completed a two-day enegy
summit in Venezuela Tuesday claiming progress on plans for tighter economic
integration but failing to tie down a blueprint for a regional energy policy.

Amid tight security, the heads of state spent two days discussing oil,
gas, alternative energy project and energy efficiency at the first ever South
American Energy Summit. The summit was hosted by Venezuelan President Hugo
Chavez, a socialist and fierce critic of the US, who said the "perfect" summit
was a step towards South American energy independence for future generations.

Chavez had said Monday he was seeking to sign a South American Energy
Pact with the region's heads of state as key stepping stone for wider economic
integration.

"I spoke about the need for a South American energy agreement, which
guarantees all the South American nations energy, oil, gas, alternative energy
for 100 years. This is very important because the world energy crisis
continues," Chavez said after the first day of the two-day summit.

Chavez said the summit agreed to name the project for wider economic
and political integration in South America as the Union of the South American
Nations, or Unasur. He said South America's heads of states also agreed to
create a permanent executive secretariat of Unasur in Ecuador's capital Quito,
but gave no schedule for imnplementing that plan.

The South American heads of states signed in Cochabamba, Bolivia, last
year a project to pursue greater economic integration. The Cochabamba
Declaration was heralded as the "cornerstone of the South American integration
process" and called for a new model of integration on the scale of the
European Union for the 21st century.

Chavez had a bi-lateral meeting with Colombian President Alvaro Uribe to
discuss progress on a pipeline currently in construction connecting the two
countries' natural gas infrastructure. The Trans-Guajira pipeline is set begin
supplying 150,000 Mcf/d of Colombian gas to Venezuela by this summer. After
five years, the pipelines flow will be reversed.

Chavez brushed aside reports of a schism at the summit between Brazil and
Venezuela over the development of ethanol from sugar cane, saying while
the US' corn-based ethanol could inflate food corn prices, Venezuela is also
interested in developing a national cane ethanol industry like Brazil's.
Chavez had criticized Brazil's recent deal to expand ethanol sales to the US,
claiming the initiative could displace vital food crops in South America.

"It's important to diversify the sources of energy and evaluate to what
point it is viable and possible to do so," he said.

Chavez said the heads of state had also talked about a project to build a
$20 billion, 8,000 km gas pipeline from Venezuela to Brazil across the Amazon,
but he gave no details on the project's progress. Agreement on a wider
Southern American energy pact was not reached.