NotiEn - A Newsletter on Energy Policy Issues in Latin America
September 30, 2010
Vol 1, Issue 12

Top 2010 Energy Developments in Latin America...


The following issue of NotiEn contains articles about important energy developments in the Americas during the first nine months of 2010.  


One of the most significant developments this year was the controversial decision by a British company to begin oil exploration in the Islas Malvinas/Falkland Islands, which has reignited a dispute between Argentine and the United Kingdom. 


Other controversial issues have emerged, such as Brazil's decision to proceed with construction of two nuclear power plants despite opposition from local residents and environmental advocates. 


In Colombia, a horrific methane-gas explosion in an underground coal mine near the town of Amagá brought renewed attention to the lack of oversight of the country's booming coal industry.


In Peru, residents of the Cusco province of La Convención organized a massive strike in August to protest against gas exportation from one of the nearby Camisea fields, the country's major gas reserves.  The action was intended to convince President Alan García to respond to local calls to prioritize domestic demand for the resource. Read more... 


Carlos Navarro - Editor


Ecuador: Initiativa Yasuní Double-Speak - September 3, 2010    
On Aug. 3, the Ecuadoran government and the UN Development Programme (UNDP) signed a trust agreement to administer the financial resources with which the international community will support the Initiativa Yasuní. In this initiative, the government has committed to leave in the ground existing oil reserves in this area of the Ecuadoran Amazon. Nevertheless, "Plan B"--to extract the oil--is moving forward more quickly, despite the agreements.

Several years ago, some 856 million barrels of oil were discovered in the Ishpingo Tiputini Tambocochoa (ITT) exploration block, in the Parque Nacional Yasuní, whose extraction would eventually provide the Ecuadoran state with US$7 billion. However, the Yasuní, considered one of the areas of greatest biodiversity on the planet, was created as a national park in 1979 and declared a World Biosphere Reserve by the UN Educational, Scientific, and Cultural Organization
(UNESCO) in 1989.

It is also protected by clear constitutional precepts, such as Article 407, which says: "Extraction of nonrenewable resources, including forestry exploitation, is prohibited in protected areas and in zones declared intangible." Accordingly, this oil could not be extracted. Read more... 

In This Issue...
A Note From the Editor
Ecuador: Initiativa Yasuní Double-Speak
British "Black Gold" Prospectors Fawn Over Falklands
Brazil: Preparing for Post-Copenhagen Economy
Venezuela: Electricity Crisis Spells Dark Days for Country, President
Mexico Attempts to Recapture Leadership Role in Latin America at Regional Summit; Energy, Sustainability on Agenda
Nicaragua: Energy-hungry Country Opts for Large-scale Hydro Dam
Shining Coal Industry is Dirty Business for Workers, Environment
Gas for Peruvians, Not for Exportation
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British "Black Gold" Prospectors Fawn Over Falklands
January 08, 2010   

An aged North Sea oil rig known as the Ocean Guardian is making a snail's-paced journey from northern Scotland to the Malvinas/Falkland Islands, where its pending arrival promises to put the isolated archipelago the site nearly three decades ago of a brief but bloody war between Great Britain and Argentina very much back in the public eye. Known in South America as Islas Malvinas and in Britain as the Falklands, the territory is a collection of rocky islands some 450 km off the coast of Argentina, which, despite losing the 1982 war, continues to claim the tiny territory as its own. After the conflict, life returned to quiet normalcy for the islands' roughly 3,000 inhabitants, who share the land with more than a half-million sheep and an estimated 750,000 penguins. Growing fishing and tourism industries have bucked up the economy in recent years, allowing the islanders to enjoy their unassuming self-sufficiency in relative peace with the outside world (see 1999-07-23). If a handful of optimistic oil companies are to be believed, all that could soon change. Geologists have long speculated that the islands are sitting on a treasure far more valuable even than its lucrative squid fisheries, which have already helped raise the per capita GDP to US$35,000, one of the highest in the world. Around the islands, according to the Edinburgh-based British Geological Survey, is literally a sea of oil, possibly as much as 60 billion barrels. Even half that amount would make it one of the world's most valuable untapped reserves. Read more... 


Brazil: Preparing for Post-Copenhagen Economy   

January 15, 2010

After the failure of the UN Climate Change Conference in Copenhagen, which was unable to reach a consensus regarding measures needed to fight global warming (see SourceMex, 2009-12-16), Brazil began to prepare for the challenges of a carbon-free economy and other sustainability issues that cannot wait for large international decisions to become a reality. One of the most important pieces will be to implement the Politica Nacional de Mudancas Climaticas, in accordance with the climate-change law (Lei de Mudancas Climaticas) signed Dec. 29 by President Luiz Inacio Lula da Silva. Congress had been debating the bill since 2007. The lawmakers finally approved it and the president signed it just days after the Copenhagen conference ended. However, Lula vetoed several provisions of the bill that reached his desk, indicating, say environmentalists, that Brazil will clearly have difficulty in effectively changing to a post-carbon economy.


Brazil could move away from clean technology  

Brazil's energy matrix is one of the cleanest in the world. Clean sources provide 89.6% of electricity generation, mostly from water, compared with the world average of 18% from renewable resources. In addition, only 7.8% of Brazil's electricity comes from fossil fuels compared with 67% worldwide, and nuclear energy provides 2.7% of Brazil's electricity compared with 15% worldwide, according to the International Energy Agency (IEA). However, there is a clear "pollution tendency" for Brazil's energy matrix, with the introduction of various gas and coal plants and especially given oil-exploration prospects in the recently discovered subsalt oil reserves on Brazil's ocean shelf. It is this aspect of Lula's vetoes that merit attention. For example, one section of Article 4 that was vetoed calls for "gradually phasing out energy from fossil fuels." Read more...  


Venezuela: Electricity Crisis Spells Dark Days for Country, President - February 12, 2010

Home to one of the world's most extensive oil and natural-gas reserves, energy-rich Venezuela is nevertheless experiencing serious power problems at the moment, grappling with an acute electricity crisis that has resulted in rationing, rolling blackouts, and periodic protests. The government blames Mother Nature. In recent months, a prolonged drought has parched the country, causing severe water shortages. A side effect has been decreased water flow (and thus reduced capacity) to the massive Guri Dam, a 10,200-megawatt behemoth that supplies more than 70% of the country's electricity.  


Located along Bolivar State's Rio Caroni, the 1,300-meter-long dam officially called the Central Hidroelectrica Simon Bolivar is the world's third largest after the Three Gorges Dam (18,300 MW) in China and the Itaipu complex (14,000 MW) along the Brazil-Paraguay border. Analysts say the crisis has more behind it than just weather, citing long-term planning and greater investment as measures the government which nationalized the electricity sector in 2007 should have taken to avoid such an "all-eggs-in-one-basket" scenario. Critics of Venezuelan President Hugo Chavez say electricity price subsidies are also to blame, fueling an ongoing consumption spike that saw demand jump 25% between 2004 and 2009, according to the state-run Corporacion Electrica Nacional (CORPOELEC). Demand rose 7% last year alone. Warning of electricity "collapse" Whatever the cause, both the government and its opponents agree the energy crisis is severe. Read more... 

Mexico Attempts to Recapture Leadership Role in Latin America at Regional Summit; Energy, Sustainability on Agenda - March 3, 2010     
President Felipe Calderon succeeded to some extent in repositioning Mexico as a leader in Latin America, hosting what was generally perceived as a successful summit of Latin American and Caribbean countries in Quintana Roo state on Feb. 20-23. As host, Mexico took a lead in pushing through a proposal to create a regional consultative bloc that excludes the US and Canada. Calderon was also at the forefront in renewing regional awareness on issues related to energy and environmental sustainability. Although the summit's 10-point action list did not mention energy policy or environmental sustainability, these topics were included in an 88-point document. Mexico also used the summit to solidify its economic relations with Brazil, especially regarding energy. The two countries are the largest economies in Latin America.

For some, Mexico's decision to embrace creating a bloc that would rival and perhaps marginalize the Organization of American States (OAS) was important symbolically. "Mexico strengthened its ties to Latin America this week in a manner unseen since last century," the Mexico City daily newspaper El Universal noted in an editorial on Feb. 25.

By making this move, the newspaper said, Mexico took a step back from the US, its longtime economic and political ally. "Even if we suppose that it is convenient for Mexico to have the US as its most important ally, the move toward Latin America is an excellent strategy," said the editorial. "This way our neighbor to the north will have to realize that ignoring its ally would be costly."  Read more... 

Nicaragua: Energy-hungry Country Opts for Large-scale Hydro Dam - March 18, 2010     
In an effort to diversify its heavily fossil-fuel-dependent electricity sector and at the same time meet rising demand, Nicaragua is putting its eggs in the hydroelectricity basket, opting for conventional large-scale dams despite growing international awareness about their social and environmental drawbacks. Currently about 80% of Nicaragua's electricity comes from petroleum-burning generating plants, making the impoverished, non-oil-producing Central America nation particularly vulnerable to external market factors. Sky-high oil prices put a serious crimp in electricity production in 2006, when Nicaragua suffered periodic blackouts. Nowadays, the problem has more to do with supply, as delays in shipments of subsidized oil from Venezuela are threatening a new energy crisis. "Because of all the problems we're having, we can expect electricity generation to be more expensive in the coming months," energy expert Narciso Mayorga explained during a seminar held March 12 by the Instituto Nicaraguense de Defensa de los Consumidores (Indec). "Remember, our matrix depends on oil for 80%. To reverse this situation, we need major investments for the promotion of renewable-energy projects."

Rising demand is also a concern, especially as Nicaragua, which among Central America countries has the lowest percentage of people with access to electricity, works to extend service to historically unconnected rural areas. Since 2001, demand has increased by approximately 4% annually. Read more...

Shining Coal Industry is Dirty Business for Workers, Environment - July 9, 2010    
A horrific mine explosion, the latest in a long string of deadly accidents, has brought renewed attention to Colombia's booming coal industry. A key energy source, coal not only fuels several of the country's electricity plants, it also powers Colombia's export-oriented economy as a whole. But, as the recent disaster made all too clear, coal mining can be truly dirty business when it comes to human lives and the environment.

On the night of June 16, just days before Colombia's runoff presidential election (see NotiSur, 2010-07-02), a methane-gas explosion ripped through an underground coal mine near the town of Amagá, some 30 km southeast of Medellín in the northern department of Antioquia. The blast killed at least 72 miners (recovery teams are still searching for victims' bodies), making it the worst coal-mine disaster since 1977, when 143 people died in the same town.

Sadly, neither of the two tragedies was an isolated incident. Last year, nine people died in yet another Amagá coal-mine disaster. A 2008 accident in Cucumbá took the lives of eight coal miners, while 32 perished from an explosion in February 2007 in the department of Norte de Santander. The list goes on.

Despite the frequency of such accidents, observers say Colombia's many coal mines--particularly smaller, underground mines--operate without sufficient government oversight. The recent Amagá incident is a case in point. Mines and Energy Minister Hernán Martínez told reporters soon after the explosion that the San Fernando mine lacked proper gas-detection devices and adequate ventilation.  Read more...

Gas for Peruvians, Not for Exportation
August 27, 2010    
Residents of the Cusco province of La Convención had to resort to an indefinite strike in protest against gas exportation from one of the nearby Camisea fields, the country's major gas reserves, to get the executive to respond to their demand to prioritize domestic demand for the resource.

On July 27, the eve of Peru's Independence Day holidays, La Convención residents initiated the indefinite strike to stop gas exportation from Camisea Block 88 to Mexico begun in June of this year and the construction of a second Transportadora de Gas del Perú (TGP) pipeline, which would destroy part of the natural sanctuary of Megantoni. The Cusqueños also objected to the high price of domestic gas, which goes for 40 nuevos soles (US$14) a tank in the town of Kiteni and for as much as 70 nuevos soles (US$25) in more isolated areas, while in Lima and the rest of the country the price is 35 nuevos soles (US$12.50) per tank.

As if that were not enough, only 5.4% of residents of Echarate district, a few kilometers from the Camisea gas reserve, can afford to use gas for cooking. Almost 92% use firewood, according to data from the Instituto Nacional de Estadística e Informática (INEI). Read more...

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