NotiEn - A Newsletter on Energy Policy Issues in Latin America
May 27, 2010
Vol 1, Issue 4

Central America Approach to Energy Challenges...

A NOTE FROM THE EDITOR

Central America produces very little of its own energy, which necessitates having to strike deals with other energy producers in the region like Mexico and Venezuela.  For years, Central American and Caribbean nations relied on those two oil-producing countries to supply oil under the Pacto de San Josť at concessional prices.


While Mexico and Venezuela continued to provide the region with oil into the start of the 21st century, the dynamics began to change, as Mexican President Vicente Fox's conservative administration became involved in a tug of war with Venezuelan President Hugo Chavez's leftist government over influence in the region. Mexico offered Plan Puebla-Panama (PPP) both as a way to promote economic development and provide oil to the region. One of Fox's promises to the Central American countries was that Mexico's state-run oil company PEMEX would build a refinery somewhere on the isthmus. That refinery has yet to be built as of mid-2010. Read more...

Carlos Navarro - Editor

 

PEMEX to Bring Competition to Central America's Energy Market

November 10, 2005

Central America stands to become the beneficiary of an oil-fueled imbroglio between Mexico's President Vicente Fox and President Hugo Chavez of Venezuela. Both are seeking, for
reasons economic, philosophical, and political, to ease the strain on non-oil-blessed countries.

The two presidents represented opposing sides regarding free trade at the IV Summit of the Americas in Mar del Plata, Argentina, but it was Fox who, on Nov. 5, 2005 signed an accord worth US$7 billion with the Central Americans to ease their energy woes.

"With this we will have abundant energy in the region, competitive and made into a platform for development," said Fox before a meeting with the presidents of Guatemala, Nicaragua, Costa Rica, El Salvador, and the Dominican Republic, and the vice president of Honduras. Read more...

Region's Ministers Meet Under Plan Puebla-Panama Banner to Avert Energy Crisis

June 16, 2005

The region's energy ministers met on June 2005 in Guatemala to confront spiking energy prices. Electricity and fuel costs have come to be regarded as threats to the stability of regional governments as these costs are passed on to an increasingly resistant public.

Participants in the meeting represent the countries included in Plan Puebla-Panama (PPP), the megadevelopment scheme frequently attributed to Mexico's President Vicente Fox. The logic of PPP is to integrate the region in matters of energy, transportation, tourism, and other common concerns. Whether PPP projects could, or would, result in decreased consumer costs
remains problematic, but the slow-moving plan could get a boost by linking to this growing issue. Popular resistance has been one reason for the PPP's lethargic pace. Read more...

In This Issue...
A Note from the Editor
PEMEX to Bring Competition to Central America's Energy Market
Region's Ministers Meet Under Plan Puebla-Panama Banner to Avert Energy Crisis
El Salvador's Mayors Sidestep Government on Unique Fuel Deal with Venezuela
Gasoline Refinery Set for Central America: Presidents Decline to Pick a Site
Panama's Plethora or Refinery Deals Could Make it a Global Energy Hub
PETROCARIBE Deal: A Lifesaver for Honduras, in Doubt
Guatemala Mulls State Oil Company to Deal with Energy Needs
Guatemala Veers Toward the Traditional in its Quest for Energy Independence
President Alvaro Colom Seeks PETROCARIBE Membership for Guatemala; Conservatives Promise a Battle
Guatemala: Rising Discontent Against Energy Company Union Fenosa
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El Salvador's Mayors Sidestep Government on Unique Fuel Deal with Venezuela

March 30, 2006

ENEPASA
El Salvador's Asociacion Intermunicipal de Energia para El Salvador (ENEPASA) has closed a deal with Petroleos de Venezuela (PDVSA) that eliminates the intermediary and promises to funnel less expensive fuel into the gas tanks of the country's drivers. The alcaldias taking advantage of the deal are for the most part governed by Farabundo Marti para la Liberacion Nacional (FMLN) mayors. Thus, there is more to it than cheap gas. This deal is also about rebuffing President Antonio Saca, the legacy of Shafik Handal, and the further adventures of the Alternativa Bolivariana para las Americas (ALBA) in Central America.

Carlos Ruiz is mayor of Soyapango. He is also president of ENEPASA. He said that ENEPASA would supply 30% of the automotive fuels consumed in the country. El Salvador burns between 30 million and 40 million gallons a month. Read more...

Gasoline Refinery Set for Central America: Presidents Decline to Pick a Site

June 8, 2006

Panama and Guatemala are in contention for the site of the most expensive project ever undertaken in Central America. Ten heads of state, representing the isthmus plus Mexico, Colombia, and the Dominican Republic, met in La Romana, the Dominican Republic, to decide whether a US$6.5 billion gasoline refinery would be built in Puerto Armuelles, Panama, or Puerto Quetzal, Guatemala. Aiming to reduce Central America's energy costs, the refinery, with a capacity of 360,000 barrels per day, would provide the isthmus with gasoline at US$8 a barrel less than open-market prices, according to Mexico's Energy Secretary Fernando Canales.

The project has the support of the Inter-American Development Bank (IDB) and the UN Economic Commission for Latin America and the Caribbean (ECLAC). The IDB kicked in US$1.5 million and ECLAC US$500,000 in March to pay for a consultant to do a two-part feasibility study. Read more...

Panama's Plethora or Refinery Deals Could Make it a Global Energy Hub

May 24, 2007

Panama has signed accords that will make the country home to two new oil refineries. A consortium composed of US-based DuTemp, ControlSud of Luxemburg, and Ecosel of Colombia has signed a deal that creates the Panamanian company EDC. The company will invest US$6.5 billion in a plant that will produce an estimated 250,000 barrels per day (bpd) of gasoline. The ink was hardly dry on that deal when officials signed another with Occidental Petroleum and the country of Qatar to build a 350,000-bpd refinery at a cost of US$8 billion, as President Martin Torrijos looked on. The price tag on each of these plants is more than the US$5.25 billion to be spent on the Panama Canal expansion. The EDC plant is to be something of a gem, a state-ofthe-art exercise that will incorporate plasma arc technology to make it, say the promoters, nearly pollution free. Said Alberto Grosso, president of Control Sud International, "The construction of this refinery will bring Panama to great3est importance in Central America and in the world as an energy hub". Read more...

PETROCARIBE Deal: A Lifesaver for Honduras, in Doubt

January 17, 2008

Honduras became the 17th member of Petrocaribe on Dec. 22. Petrocaribe is the program of Venezuelan state-owned Petroleos de Venezuela, S.A. (PDVSA) through which struggling Central American and Caribbean countries buy fuel products at favorable and deferred terms (see NotiCen, 2007-11-29). Honduras agreed to terms that would supply 100% of its bunker fuel and 30% of its gasoline and diesel for the next two years. The administration of President Manuel Zelaya has said repeatedly that the state would not be able to continue to subsidize fuel prices as it did during 2007 to keep the economy from stalling.

But Congreso Nacional president Roberto Michelletti of Zelaya's Partido Liberal (PL), once a supporter of the plan, came down against it. In a Jan. 5 meeting, the congressional delegation decided to vote against approval. The stated issue upon which they turned was the debt Honduras would accrue under the terms of deferred payment. Read more...

Guatemala Mulls State Oil Company to Deal with Energy Needs; Socialist Inroads Feared

January 24, 2008

Guatemala's freshly inaugurated chief of state has said he intends to seriously consider creating a state oil company. The country produces some oil and is exploring for more, but the main reason for a state company, President Alvaro Colom said, would be to negotiate imports of oil from Venezuela. As president-elect, Colom said in December he would send a delegation composed of his Minister of Energy and Mining Carlos Meany and his transition manager Edgar Barquin to look into joining Petrocaribe, the Venezuelan program that supplies oil under special terms to Central America and the Caribbean.

Colom said at that time, "We want to study Petrocaribe in detail, we want to know exactly what it's about." He had been briefed on the program by Venezuelan President Hugo Chavez when both attended the swearing-in of President Cristina Fernandez in Argentina. Read more...

Guatemala Veers Toward the Traditional in its Quest for Energy Independence
May 29, 2008
Guatemala's president announced a plan to reduce the country's dependence on foreign oil. The initiative will depend instead on foreign investment, somewhere in the US$2 billion range. President Alvaro Colom said the investment would buy the generation of more than 920 megawatts of electricity, and would permit a medium-term revamp of the country's energy mix.

At present, 46% of the electricity in Guatemala comes from bunker fuel, the heavy residue at the bottom of the barrel, after gasoline and diesel have been distilled away. But even this stuff has been subject to enormous increases in price. By medium-term, Colom meant the projects he has in mind would come on line sometime between 2010 and 2014, if they start up this year. The projects are a mix of geothermal, hydroelectric, and coal generation. Once running, oil would only contribute 5% of the electricity, 47% would come from hydro, 2% from geothermal, and 46% from coal. Read more...

President Alvaro Colom Seeks PETROCARIBE Membership for Guatemala; Conservatives Promise a Battle - July 10, 2008
PetroCaribe

Venezuela is on its way to becoming Central America's most ubiquitous purveyor of petroleum products, having just welcomed Guatemala to the Petrocaribe family. Petrocaribe is the program under which the Venezuelan state oil company Petroleos de Venezuela SA (PDVSA) supplies fuel and petrochemical products to the isthmus and the Caribbean on very favorable terms. The company already has deals with Honduras, El Salvador, and Nicaragua, while a heretofore reluctant Costa Rica is looking ever more favorably at signing up.


Just a couple months ago, a Guatemala deal seemed unlikely. President Alvaro Colom wanted to negotiate for a supply of 30,000 barrels per day, but his Energy Minister Carlos Meany said there would be no contract when the Venezuelan government offered only 10,000 bpd. That offer came after a preliminary discussion between Foreign Minister Roger Haroldo Rodas and his Venezuelan counterpart Nicolas Maduro. Read more...

Guatemala: Rising Discontent Against Energy Company Union Fenosa

April 8, 2010

The municipality of San Pablo, in Guatemala's northern department of San Marcos, is divided between the approximately 40% of inhabitants who refuse to pay their electricity bill and those who would rather stay clear of trouble and continue to pay. "The problem is that the charges are excessive. When my administration began, the municipal fee charged by Distribuidora Electrica de Occidente (DEOCSA) was between 26 quetzales and 27 quetzales (US$3.26 to US$3.38) per household. But then the electricity company introduced a hike without prior warning. I don't know why the bill says 'municipal charge' when we never receive a single cent of that money," says Rolando Barrios, mayor of San Pablo.

But even though Barrios sympathizes with the 35 villages that consider that their electricity bill is far too high, he disagrees with their decision to suspend payments and claims that activists from the Frente en Defensa de los Recursos Naturales (FRENA)--a social organization affiliated with the Frente Nacional de Lucha (FNL) labor union--are inducing people to use this as a means of exerting pressure. Read more...

LA-ENERGAIA
Energy Policy, Regulation and Dialogue in Latin America

 

NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program