~ladabiblioteca.olade.org/opac-tmpl/documentos/hm000568.pdf~lada organizacion latinoamelllcana de...

Year 22, number 2, April-May-June 1998

~lada ORGANIZACION LATINOAMElllCANA DE EREllGIA

Organización Latinoamericana de Energía

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Cuadro de Texto

latin American Energy Organization Av.Antonio José de Sucrc NSB·63 & Fernándea Salvador, Edificio OLADE. Sector San Carlcs t P.O. Box 17·11·06413

Quito, Ecuador· Phcnes: (593-2) 597-995/598°122 Fax: (593-2) 539-681 • E-maH:[email protected]

ISBN 02544-845

PHOTOGRAPHS Ministry of Mines and Energy of Brazil, Eliana Fernandes/Petrobras, State Secretarlat of

Toudsm/Dominican Republic, lmage Bank

EDITOR Gustavo Martínez

EDITORIAL BOARD Ana Ua Duco and lidia Macías,Argcntina!Gloria Villa, Costa Rica/Pedro Morales Carballo. Cuba

Dieuseul Anglade. Haití/Ricardo Samaniego Bread>, Mexico/David Small, Trinidad & Tobago Cristina Mattos. Uruguay

EDITOR·IN·CHIEF Luiz A.M. da Fonscca

Excculivc Secre1ory, 01.AOE

Tha Ei1crgy Mogol•'ne is a quarterly pvbllcation is.sucd by thc P~rrnnncnt SClCretariat of tho Latin American Encrgy Org<'!nization (OLADE), undcr thc supervisloo of its Edrtorial Board. The signed arü<:les are thc. sole responslblllty of thclr auchors and do l'IOt l'H:ccss~u·ily refloct thc offlcial posícion of the Org3niz:ttion or lts mcmbcr countrle~. 01.ADE permics thc reproduction of dlC prescne articles. in part or in íull. as

wcll as Hh.i~tratious. at loog as the sevree is quered.

MERCOSUR: Public and private sector integrauon Calendar of OLADE Events

14 Spotlight: Restructuring Brazil's Energy Sector

22 Enerlac '98: Preview

29 Energy News

29 Statistics

31 Notes

8 Sustainable Development Climate Change and Energy: Aspects ofTheir Linkage

2 Economy and Energy Standardization of Fuels: An lrnportant Step

Editorial

ontents


f1~Pip~~ (()11!)~ 1

)


S01Hce: OLADE·EC. Energy·Ecooomic lnfonnalion Systom (SIEEíj

51.0% Average oil and gas ~~~~~~~~~~

50.0% 24.0~'o 34.0% 75.0% 58.0% 600%

Oíl Liquefied petroleum gas Gasoline Kerosene Diesel oil Fueloil

Among the acnons being carríed out to achicvc this goal, OLt\l)t has parlkipil!C'd in il joim projt><"I wíth other cooperetion and dcvelopmcnt agencies, in order to lay thc groundwork for rhc stanrlardization of fuds, which while contributing 10 improving thc quality oí Iucls and rhus reducing their írnpacrs on the environment could also Iacititare the trade of fuels in lhis region, with

As the region's preemtnenr technical forum for the cncrgv sector, far be it from OLADE lo neglect the efforts bci 11g made by íts mernber countries to promete susrainabilitv in rhis S<"C(OI'.

Energy is an essential element for economic growth, cspecially for the countries of the region of Latín America and the Caribbean, which is charocterizcd as a major onergv prod ucer,

3

ince the United Nalions Conference on Environment and Development that took place in

Rio de Ianeiro, in june 1992, the issue o( "sustainable developmenr" has become increasingly irnportant on the agendas of the countries of ali continents. This concepr is aimed ar striking a balance betwecn economic growth, environmental concems, ancl social equitv,

INTRA-REGIONAL TRADE IN THE OIL ANO GAS SUBSECTOR IN 1997 (Percentage share of total international

trade of the region)

Thc participation of prívate enterpríse and foreign capital in the

In the case oí latín Amcrica and uic Ceríbbean. the deplction of rnargins that traditionally cnablcd thc S1a1·c• to fi11a11\C rhe C'nCrgy sector and growing severüv oí íi~cal problems in the countries have been dctermínant íor consolidating tho processes aimed .u openíng up the ref.\íon to the inflow oí international tcchnologv and capital.

The Latín American situation: toward trade liberalization ancl integration

Thc succcss of thosc efforts depends on the possibilíty of reaching bread agreernents regarcling quality sran- dards, taxes, and other noncustoms constra i nrs appl ícable to t he impon oí di ífercnt energy sources.

The countries of Latín América and the Cari bbean are promoti ng important reforrns in the energy sector to attract national and foreign prívate invcstments, improve service coverage and quality for the population, and increase the trade of cncrgy products.

specifications that are likely to be complied with by the region's rdining installations.

l..Otin Am0rk<ln Enei:gy Organlzation • 01.ADE


The seminar was organi1ed by Al~PEL and Oli\DE and was attended by experts from Argentina, l~razi 1, Chile, Colombia, Ecuador, Jamaica, Mexico, Panama. Paraguay, Peru, Dominican Republic, and Vcne;i:oela. Deleg;,ites from thc V\/orld Bank, thc European

The re>ults of thcsc studics were c;hecked, co111'irmcd, ,rn(l co11sol- ida1ed al a semi11ar held in Quito, Fcuaclor in October ·1997. On this occasio11, a consensos was reached regardi ng the hormon i¿ation of Íl1els. which lcd to !he rccorn- me11clation of common spccifi- c:ations. as indi<:<lt<~rl in the tables included herewith.

rhr ~ludies w~·rc co11dl1Ctcd al thc S<tlll~' time, with thc p • .Htidp.irinn ní n;itional cxpcrts, whi.-11 w,1, tk:cisive 1101 only fo1 the fmmultition oí 1hc case slt1dics but ;ilso ío1· tl11.: c:li~rus,ion of íeasil.Jlc ,111d acceptablc P" r~1 meters.

• ARl'EL and Alcon,ult, with support from the World 13ank, prepored case studics ol Peru, Chile, Jainaic,1. El S;ilvador, ancl the Dominican Rr.puhli< and mark progress in tlw a rea of fucl qua 1 ity spcci fic al ions.

• OL!\D[ and Boicip-Franlab, with support from the European Commission, conductecl cnsc si uciies ol [cuador, P;rnama, and Paraguay ancl prepMccl a Creen Book {sce inset), which provide rccornmendations on nir and luel qual ity specifications.

In 1 ine with the above-mcntioned Principies ancl Plan of Action:

The OLADE-ARPEL Project

plans of action should be formulaled and implemented for the gradual phase-oul of lead in gasol ine,

The Plan ol Act ion of the Miarni Summit specifically determines, arnong <>ther aspects, that national

• íoster cooperation p,1rtncrships in ordcr 10 c:onsol idnte our c;1pacity to prevorll and control pollution, protec:t ecosystcms and use biological resources sustainably, and prumole the clean, dficient. and ration;il production ;ind use of energy.

• Promo 1 e soci;i 1 weH a re <1 nd economic prospcrity in suc.:h wa)• a> to íully t;ike into <iccount thP. i mpac 1 w<> procil1 ce on 1 h¡¡ environrncnt.

• Guarantc!<' s11~1ai11abil' tl~vel· opm1•111 .111d conserve our cnvi- ronment for futuro gc11era1 io11$. Social progress ~nd et"U11omi(: pro~perity t:.111 011ly be ensurcd ií our pcoplC' liv<' in ,1 healthy C!1wi ronme11t a11d om ecosys- tems and natural rc~so1irces .ire usc!d careíully <111d resµonsibly.

The JJecJaration oí Principies oí the Miami Summit contaíns approachss directl)• 1 icd to the tssue of fuol qualiry and i1s linkagc wilh 1he ¡~nvironment. /\n1<>11g these princi- plt's, lhe fol lowing shoLJlri b•' highlighted:

These elforts werc marle within a mutual cooporation and cumple- menrauon (rarncwork inspired by thc mandare oí the Prcsidcnts and Chicfs of State issued al thc Sumrnir of the Americas thot took placo in Miami in 1994.

the European Comrnission and with the participation oí the firms Alcon- sult oí Canadá and BeicipPranlab oí Franc:e, have led to thc establish- ment of consistent paramcters for gasoline, dícsel and light luels wbich provide important standards for the region.

4

The efforts made by OLADE and tho f~eciprocal Assistance of Latín Amer- ican Oil Cornpanies (1\RPEL). with support from the World Hank and

• Chcractcrtsucs of reíining focilitic~s and expcciations of their devclopmcnt in thc futurc.

• Structurc of lhe motor vehicle (leet and charactenstics oí ncw motor vchicle models. becausc of thc importancc oí the transportction sector in íucl consu mption.

• Framework agreements on envi ronmen ta 1 protection.

• Standards set by othcr cou ntri es and regions.

l'he es1,1bl blu11e111 of common ~t,1nd,1rds for thc r<~gion i~ 1101 ,\11 issuc l'hilt can bu handled eosily. bccause thcse rcq u i r<•111 ents are clo~<·ly li11ked to the following:

Quality standards: prerequisite for fucl lrading

The rise in intra- <)(ld intcr-rcgional en(:'1·1w trado has given risc ton set uf dernands 1.hat havc of1e11 been spe~ified, among whic:h rho nond for similar qoality standanls tor oil products.

lntraregional trarle [n the natural gas anrl electric powcr subsecrors is still marginal hut wil] be incrcasing substantiallv over coming vears. in view of current in¡9gration projects that are being irnpjemented. Regarding lrade ílows in thc hvdrocarbons subsecror {oil ancl products). however, the prospccts are more promising.

sector is also tl¡J:> result of the enlargement of markets and the shift to economies of scale. At present, thcre is a steadv trend among the countries of the región roward the trading of oil, oil products, natural gas. and electricity.

tconor»y ttnd tncrgy


5

Nota; Maln;11 .., .. , contem vm spec;oied at 5.00ll pprmv for lho year 2001 ond at 2.500 PllfTI" lo< lh i- 2005 lar i¡¡llt fJOI oi •nó 140 ppm lar liqu•foe<I "etrci•um 9"'·

. . Specifications

Cetane raling • al 2001 45 Mínimum • at 2005 47 Mínimum - Oistillation poinl 90% (TOO) 3so•c Maximum . Sulfur conlent • al 2001 5000ppmw Maximum • al 2005 2000ppmw Maximum

Range of density 820860 kgim• at 15° e

Total contenl of aromatics 30%vol. Maximum

STANDARDS FOR DIESEL OIL Goals for the year 2005, unless otherwise spec1fied

Specifications

1

Regular Premium Gasoline Gaso!ine

Research Ocl3ne Number lRONl 91 95 Minimum Motor Octane Number IMONI reíeren 82 85 Minimum Research vaoor ocessure IRVP\ 9.0 to 11.5 osi Distilalion points:

1 Maximum • <Ni. 1150\ 12no '90% fT90) 190' Maximum Sulfllr content: Maximum -at 2001 1000 nnmw • at2005 1 400 mmw Maximum Total oontent ol aromalics 1 45% VOi. Maximum Contern ol olefins 1 25%vol Maximum Content ol benzene 1 2.5% vol Maxilnum Contem ol Ollllllen 2.7%weigh! Maximum Comem ol lead • at2001 0.4 g/1 Maxhnum • 812005 0.013 g/l Maxhnum

STANDARDS FOR GASOLINE Goals for the year 2005, unless otherwise specified

Brazil levies a 9% tax íor the import of naphtha. gasoline, kerosene,

kerosene, auto diésel. industrial diesel, and fuel oils. Jet iuel, aviation gasoline, and liquefied petroleum gas are exempt.

Latin American En(';rgy Orgrtniz?.t:on • Ol.Al)t:

In Barbados. BDS$10Y.99/m.i are chargerl for the import of gasol ine and BDS$65.99/m3 for the import of

Argentina levies no specific tax whatsoever on the impon oí oíl and products: even the statistlcal tax levied on sorne products is zero for these fuels. The only cost difference between a domestic procluct and an imponed product is thc 3% financia! cost on presumcd earnings and 9% valueadded tax (VAT) that the importcr must pay in advancc when entering the product into the c:ountry.

In the región there is a great deal of disparitv in this arca.

On tho orhcr hand, $1'lC'cifir domC"'tic taxes or «a vatorem iaxes do not ;1fíccl tradc flows bctween countries, so rhat, whenever possibíe, taxes on thc hordcr should be rcduced and replaced by domestic taxes, 10 prevent public revenues from being affcctcd,

A poticv aimcd at cxpanding intra- r<>gional fut>I tradc in 1 atin América and the Caribbean should take ínto account harmcnization of import duties and other non-customs barriers.

Harmonization of irnport dulies: another prerequisítc

Thc First Business Forum of the Américas. held in Ianuarv l YYll in Caracas, Venezuela, recommended the adoption of the fuel standards prepared by OLAD[ and ARPEL and this is indced an importan! contribution, in operational and practical terms, to thc efforts of these two regional organizations,

Comrnission, the U.S. Department of Energy, ihe French oil company Elf Aquitaine, and the consulting firms Beicip/Franlab and Alconsult.


Meeting this dern;ind with quality fuels and cco11omic critcria is closcly

Alongsidc: growlh oí dem,u1d, lfw rcgion's rcfi11crics .ire focing iinpu1t,1nl th,1llenges reg,1rding compli,111ce with environmental require111en1s, intl\lding slrirter spec ifi coti ons l'or oi 1 procl ucts. As ;¡ resull, il is q11ilP. likcly th.11 lhrrr will be regional lrcncb low;ml lhc consolid<ition of s111;1ll, simple! rcfincrics, opti111iz;1tion of ('ilici<'ncy i11 opcrations, allCI <1r1 increase in Lhe capacily oí new reíineries or an upgrade of the largesl ,111d mosl modcrn refinerics tha1 alrcady exist.

ro1,1I rdi11ing rnp..icity i11 L,1ti11 Am(•nca ;incl thc Caribbcnn is al pr<~st.:111 so11wwlrnl 111or1.: 1h.rn 7 .5 mi llinn barr(!IS pcr day, wilh an ,we1 ,1ge ac.:LL1.1 I t•>t' uf ~ ,1 p,1< i t y ni' 80%. lf no 111.:w rt1fini11g <.:.tpat:ily is addcd lo thc r<.>gion, 11 rnay wcll l)pCfll1l<" ,1 11PI impnr'IN ni t1il µroclucts i 11 1he t·oming 1 O l() 15 yr~M,, l'hr: possibility nf adding lhis n<:!w refining cap.1rily will i11 lL11·11 dr.p<>nrl on tlw r;lt<' .1d1kV<'d by the priv;¡tL¡afion 1Ho<'es> •• tmo11g olhcr f,1(101'~.

rhc growth in clcmand for ni 1 produ<.:ts in lhe diffcrcnt cot11l11 ies o( thc rcgion will runge be1ween ·1 % a11d 4%, 10 a Jarge cx1cn1 as a resull of thc í ucls u sed by thc transportation scc101·. 11 is forr.r.1st th;it fue! oil will be rt'pl<1ccd by 11atural gas for electric power gener¡¡tion.

OL1\DE for<~<.:asting studics indica1e lhal the de111and ior oil products will amou ni 10 7 h miU ion barreis per day by the year 2005, in contrast to 5.8 million barreis per day in ·1995, This rneans 1ha1 a new refinery with ,1

capocit1• of close to 180,000 bMrels pcr day will have lo be buill cvcry year.

The nexl sleps

lt is opp;1r<'nt 1h;1t, at pre><mt. onc: oí llic 111;1jor obstoclcs 10 opcning up, libt>r,1li7,llion. ond rxp"nsion oí lhc bro¡1d market of oil producls is thc lac:k ol' ;tandardization in 1hc cu;lo1ns duly poi icie; oí 1he counlries. lt is 1hcrcíorc ncccssary to 1nakc ;pccial política! eííurts 10 ob1oin the support of the countries to ;ic:hieve pmgr<'ss in this arca.

1 hcrr ;1rc 110 cu>lrn11s du1ics on hydrocarbon> in Nicaragua and Uruguély.

1 he ad valorem taxes est'1bl ishcd hy Vcn<'7U<'la flurlu«H' l><!twoen 1.;% ,111d 5º1<•. Tl1t> 15% r<He is for gnsol i ne, i 11clud i 1\1¡ aviation i.;osol i ne; 10% íor uvcl<" nil, kemsen1>, 8·'' oil and il1cl oil; and 5'1o for n:itur;1I g,1s ,11·1d Jiqtidied p1>1mlN11n B•''· i\p,ul from thc '1bove me11tio11cd wxes, gasoli1w mtist p;iy 13s0.70/I it(!r; gas oil B:.0.16/lilt'r: ke1ose11e BsO.'l 'l/litt"r; aviotion µ¡¡sol in<.> llsO. I Oliler; iud oil fh 15/lill'r; ;111d nudc oil lh0.021i1c·r.

l'anarna has a spccilic 1ax schedule. whereby ,1 1ax o( 1~$0.5()/g,11. Is levied on the import oí gosol irw; ll$0.2Sígal. on dirsrl; ll$(U 'Vg;1I. rni ln111ker "C"; <ind 13$0, l 3/g<il. on jet í11<'I.

l.ikcwise, in Mexico, the customs duty Ior thc import of crude oil, aviation gasoline. kerosene, gasoil ur dicsel oil, natural gas, and liquefied petroleum gas is ;i fl;it rare equivalen! to Hl%. Cnsolin<' is tax- free. In addiiion lo rhc cusioms duty cxornptions applícable to rhc Unitcd $1;11c:s and Cariada. the countrv has also sign<'d a ircc 1 rado agrccmcn1 wiLh 01her cOl11111 ics.

The custorns durv in Honduras is 1.S% on thc CI F pricc ror al 1 oi 1 products.

kerosene, jet Iuel, and crude oil. thcrc is a custorns dutv oí 5%.

6

In C11Mem;il;i. ;i custorns duty of 1 O'Yo over the CIF val u e is levicd in the case oí gasoline imports (includiru; aviation g<1soline), diésel, bunker, liqucíicd pctrolcum gas. naphtba, gas oíl and aspha!i. For

ThC' customs duty k-vicrl hy ( ir('llada on the import oí g;1~olinE!., die~<"I and liqt1Píic>d pc~trol~tu11 g;-1s amounts lo 20% (nol .rpplic.ablc un products corning (rom Curicom). In addition, g.-1soline musl pay ¡1 spcciñc impon tax oí EC$0.l 1 per liter.

Thc n1slo111> dut y levicd IJy El Salvador íor thc impon oí credo ou. ¡,1.1>uline, (lie,E•I, í11<:>I oil, krroscnC'/jct (ucl. liqucfied pctrolcum g'1~, ,111d ,1~phid1 amounts to ·1 % on thC' CI r value.

According to legislation currcntly in force, in Ecuador hvdrocarbons con be irnported freely. Neverlheless, the country ha« an extensivo and complex sel oí tax schedules rhat penalizc imponed producrs on thr: basis of thcir respective priccs, that is, i í the price oían imported product is low, thc c11s10111s duty is high and viceversa. Top rustoms duties are: 400% íor lucl oil and asphal: Lcn1l•n1; 360% (or lndustria' solvente: 3!30% for premium gasoline and <lVl<lliOll f;<lSc)I ine: 'l00°;., íor ·•ecolo¡.:icol '' leacl-free and super prcmiurn gasoltno aod for spray oíl; 2°l0% 1'01 j('I f11C'I; 240'V., lor fucls used for 1r;1dili(1ri.1I fishing; l 80'V., ior industrt.il asphalr: 160% (or diese! oil; .md 1.50% Ior íishi11g diesel.

Costa Rica is levying a 2% tax Ior the import oí all oil products (incl11ding crude oil), axcept jet Iuel, for which a r~t<' of 20'1., is appl icablc. and kerosene, which has a 1 0'}{> rax.

natural gas. liqueiied petroleurn gas and othcr fucls. This perccntagc is zcro for products coming (rorn MERCOSUR.

Economy and Encrgy


7

1 . Background and approach 2. Current situation 3. Principie for setting upa strategy to reduce

motor vehicle emissions 4. Air quality standards 5. Rcgulation of motor vehicle emissions 6. Regulation of gasotine and diese!

specifications 7. Cost of proposals 8. Organization of a regional strategv

TABLE or CONTENTS

Thc Croen Book can be ordered from the Porrnanent Secretaria! of OL/\Oc, and further information can be lound on OLADE's web site: www.olade.org.ec

Tho suggcstions thal are made arC' applicable 011 :i national and regional lcvcl.

The Green Book is, in addü ion, a guido offcring the necossarv guidclines ancl baste data to define the policics and srratcglcs that can be uscd to prepare a Iucl quality improvernent plan, compatible with the objectives set by thc region's countries in order to improve the alr quality oí the chies,

As part of its conrribution to the regional stucly, 01.ADE propared a documcnt known as the Green Book, which provides the mínimum coefficients and stanclards for fue Is in ierms of cm issions of poi luranrs.

The Green Book

U.tin Arnencan f11erg~r Orw.i11iztJ.li{)n • OlADE

Luii A.M. da Fonseca, Exccut ivC' SC'r1 r.tary oí 01.ADE

Carlos jaramillo M., Oli\DE l.t)nM1l1a111

This studv is cssenrially H

continuation oí the sludv carucd out by OLALJE and 1\IWFL on fuel qualitv spcciñcations and is mainly aimed ¡it assessing the impact oí rhcso spccifications anrl of the new cnvircnmcntal requirements 011 thc region's rt!fining facilities, how rhe refineries will adapt 10 dctenntning Iacrors oí oil products trade, and thc tnvestmen: requu emenis ami economic and financial feasibílitv conrlltions of 1h~s<' 1·efi 11P1'iP~.

l.ikewise, íi11,111<.:ing altcrnauvcs will be analvzed within the frarnework of reforms and ortvaüzatfon undcrtnkon by rhc rcgion's govc~rnmcnls.a;

OLADE and /\lü'EL, along with the World Bank, wi 11 be conducting ¡1 regional stucly to assess these aspecrs anrl recornmend alrernanves and strategies thal could be uscd by thc countrics.

linked ro the issue oí optimiz ing refining facilities and trading oil products in L;itin America and the Caribbean.


. . . . ~


9

On M<1y 16, ·199u, Jl) JJ<trl ics to thc Convention had ;ig1wd lht' Protocol, although the oolnicottv irnportant step is ratification. Rat

Thc goals r,i11gc (rom J reducrlon uf 8%. to an incroasc oí ·1 0%, takon Irom thr: ·1 'l'lO levels, ovor rhe conuuitmcnt oeríod :!OOH- 2012. lf ali Partics mcr-r thoir tar- gcts, thc rcdurrlon in <';'111i,>ion> trorn 19'10 levf>b ror th<1t group will be ,11ou11d 5.2'Vo. Comparcd

'to avcragt:? business as usual pro- iectíons, ih is wil 1 moan ,1 cut oi ovrr 29'\\, (rom wh,1t ernissions wou kl orherwise havo bcon i11 20Hl.

The Kyoto Protocol to rhc llnited Nations í-ramcwork Convention on CI imare CJ1,111ge (UNFCCC) was adopted at the third Co11ier- ence uf the J'arties to the Convcn- tion. The cerucrpirx:e of the kvoio Protoc:ol is a legallv binding c.orn mitrnenr for developed coururics (tlw Annex 1 Parrics) to control the emissions of the main ¡¡rcc11ho11se gases, im:ludi111i carbón dioxido (CO?) and merhanc (CH.,), on tho basi s of ·1 990 lcvols.

The Kyoto Protocol: An lntro- duction

/oanna Oepled¡¡c nnd lecoo Sw<1[!c1; cxperts of tbe UN/CU:

Sccretsrint

Laün Americen Energy Orga1):zation • OIADE

\/Ve are provitling bclow a sum- mary oí rhc fivc~ prt>SP1H,\tio11' marlc rluring the St:lllin,ir which addr<"'S diífcrcut aspecis of this issue. Th1:1 opinions exprosscd herein are oxclusivcly 1hosr. of the aurhors 11nd lhNf>fore do not nec- <'~~~rily r~pre~c11l those oí OLAD~ and its mcmbcr counrrios.

• Prornoting conracts among ihe participants, in order 10 idc11tify and facilit,ltc more opportunitics for joint Dctivitics in tlus area.

• Presenting and discussing irnporrant clünatc change issues, espcciallv rhose involv- i11g the energy sector of Lat in American and thc Caribbean. such as the Framework Con- vontion 011 CI imate Change and íhe results oí ihc World Summir of Kyoto, held in Iapan in Oeccmber 1997.

The Scminar, which was spon- sorcd by the Unitecl Nalions Envi- ronrnem Programme (UNEP} and the Global Environmcnt F;icility (GE~J, was aimed at:

Aspects of their

• 1 • ~::: '

'


vVithin this Ír<1111ework, a rcoricnta- tion oí the l.Ztlin ,1\n11:r ican t•ncrgy 111alrix is 11ol only a di<1llengc~, it is ¡1 verit;1ble imperJtive. To do this. ,1

In order lO transíorm c1w1gy into ,111 inslrL1111c111 of >Ust.1in,1blc• dc'v<'lop· 111<>111, ,1 1\1dic.tf (h,1118<-' in <.urn.:nl erwrgy pro<luc:tion ;ind con~L' 111p1 inn Jl<lll('fl)' i> lll'('t:SS<try. '\;('V('l'tlwl<>s,, th i~ tmnsilion will be sha¡wd by world trends, such as glob,1li.-:.1tio11 of th(~ c·¡·onomies, free• tr;irk•, n><;lrut - turing ;rnd priv,lli/,lliun oí publ1t t<nergy ~t'rviu·s, t'11vironn1enl.tl rt:g· ulalion,, etc, which ~re imposing stro11g limitations 011 lr<1dition,1I rl;.1yE>rs.

1\t thc Rio Conference in ·1992, it was obviou~ that t:nt:rgy play<•d ;i

important role in suslainable devel- opinent. Agenda 2 ·1 thGt wJs agreed upnn on that nc:r:asinn urgt>d 1 lw States to find more eílicient wa y; tu ¡.¡roclucc, dislributt:, and c:onsL11ne

Reg.irdle>s oí thc unu:l'lai111ies in di· m<ltc iorec,1stíng. thcre is no douht th;it cmrC?nt e1wr¡w p,1llerns Me driv- ing thc world on ;in un~ust.1in;1ble cour$C that i< jcoparclixi11g worlcl cfi· rndte. 1 hi' i' lhe linkilg<' bclwccn ('ncrgy ;111d di111.1IP d1.111ge.

would ri't' tlm·dold 1 rom tlw pre· industri,,I lcvt'I <)Í 2110 pp111v, whid1 would lv.1d lo l<'111pPr,1ture> tl1,1t. 011 c1v1.·r<lg<..•, vvould IJ<..• l><.!l\Vc<..'n 1 ._tnd .l..5 <kigrPes Cc>lsitis higher th;111 cur· rcnt tcmpt'roturcs.

10

Tlw s~:cond Scicntific Asscssinent oí thc lntcrgovcrninC'ntJI Group of bpcrls on CI i ni,1 le Ch;111ge 01 'C C), conductcd in l 'l')S, sl;ites th;it "lhe n1ajori1y uí scie11tiíic evidenc;e indi- c;ites a clisccmible nnthropogcnic inrlul'nn• 011 lhP. rlimatP syste111." Thi> inílucnc(~, whid1 is evid~mt in global w01·n1ing, is dueto thc growing con<·cnlr;il ion oi grPPnhouse gases in the ,itmo:.phere and Íl>

Encrgy, Climate Change, ancl Sus· lainablc Ocvclopmcnt

I •, 1U!n 1vl.imn, F xpert in Fner¡;y ,1nd CI i11 lille Ch.1nge, Costa l?irnn

O(ficC' for Juinl /111¡1i<m<·11Wion

111 conctusíon, the adoption oí thc kvoro I' ro to e o 1 111 ;1 r kod il

w.11P"ht'd in th"' (.'on- vcnt io11 lll'O< <1". Th11 real work on ini¡)ll'- L.• nwn{,1li< 111. howevcr, b unly jusl l>~ginning.

In addition. in contr,1•a to thf' pasr. iho majoruv oí fulur(' investmcnt in cncrgy systcms will tako piare i11 dovoloping countrics, 1l t irtum- stancc lhat ¡, oücr i11g ;i historir,11 opportunitv (or these countrios. 1 lw íl<"CC'SS 10 now IC'Ch·

11olnt-:i• .11 <>plio11> will cnahlc thc;e (OU11ll'i()S IO ovoid thc unsusta inahk LUlll>l' l<lkt•fl bv tJic

industriulized counrries, This is thc linkag<' h<•lw<·cn r1wrgy ,111d ~u~t.1in· ,ibJ.., developrncru.

Throughout the world prospecrs tor rcnewablc rcsourcos <He suffiricntlv promising to trigger "" reorientatiou oí the t'11ergy svstcm. For cxarnplc. it was recenilv announced tha: wind gencrmion was cqual to nuclear 1 xiwor gonoranon.

energy and requcsted (urthcr support Ior susrainahle cncrgv svstoms from the environmeutal standpoint. with thc priority use or renewable energv sourccs.

According to the IPCC, in order to stahitlze the current co, concentra- tion lovol in tho atmosphcre c:rno ppmv) and thus preven! hazardous interference in the climare systcm. i mrncd iatc cm i ssi on reduc.ti ons o n rho order oí 60 10 70'Y,, would be requircd. lf the currcnt lrc•nd con- tinues, in lhP. vear 2 ·1 00, the con· ccntrarion of U).> (1000 ppmv)

impact on lhe E;uth's energy hal anee.

The Protocol set out both a shorr- tcrm anrl a longnr-rerm program of work. In th<' <ho: t rerm, tho Fourth Confcrcnce of rho l'drlics of the Con- venuon (COP 4), schcdulcd to be held in Hur-nos Aires 011 Novcmbcr 2 1, 1998, is bl'ing planncd anrl it will includo fur- thn work on the thrr.•e cxtcrnal meehan isrns and on carbón sinks. In thc l<>ng<'I' rcrm, rho Protoc ol inl ludes ,1

number of m llestoucs with fixcrl rk-arllinr«.

ification by 55 Siares is nec.essary, including :\nnex 1 Parties accounting for :;:;% of CO; omíssíons from rhat gm11p in 1 'l90. i\lthough the date oí cntrv into forre is rliffi(ult to predict. an optimist ic Iorccast would be 2001.

Sustainable Development


11

The cs1ablishmen1 oí go,1ls ío1 the A1111cx 1 c:oL1111ries ha; cr<~.11ed ,1 ~lob· al emissions red uct ion rn;lrket. lh<~ voltJmc? ol 1hc m¡¡1·ke1 of avoidccl cmissions Mising from lhe (le.u1 Dcvclopmcnt Mcthanis111 will depcnd on the IPV<'I of dom<'stir effnn' nMclc by thc cl<."vclopt•d CoL11)- trie;, Lhe levd oí lr<111s;1c tion'> llMd<' in emissions trudíng, und 1hc numbcr of joi n 1· i mpl <'11w111Mio11 pl'Oj ccl' bt'tWt't'll llu.: i\nncx 1 rounlrit:s.

developing colrntries. So 1h,ll thi< gut1rdulee can beco111e effective, it is necessary to establish stringent oper- a1ing rules. 1 lw rleveloping ('Olll)-

trics should de~ig1i.tle ur esl<1blish .i

NationJI ;\uthority to be in chargc ol rcvicwing projc~cts thilt will be sub- 1nitted í11 .ictord<111cc with inlerna- lionally establishecl crit~ria Jnd their local priorities.

lnstilulion.1fin1lion oí 1he Cle,rn f)"'velop- ' H Crl l lv\(!C hc;i nis 111 shoulcl guarantee thJt lhc proj<:('lS lhill are implemented eífec- tivelv contribute to ,11tenualing lhe cmis- ~ion':> inc1 e ase curve st'2n1n1ing fro1n the econom ic gl'owth oí

Th<' ('10.111 OC'vr·lopm<'nl M1>rh~ni<n1 i> 011e oí th<.' 1hr~·e ílexiuilily 111tch<1- " brns i nnHpo r:11 ed into thc Kyoto Proco \.ol. lt ~trivc~< to h<>lp ,\1111cx 1 l'OL111lric.:s compl11 wi1h thcír grec:>nhrnisc> g,15 emis· ;ion n~ducl ion go,1 Is in th i rd cot111 trics, Md tha1 is why il is 1hc only nwch;111i~111 1hat ;írmd1,rneuu>I)' l..>ríngs togethcr dcvclopcd nnrl dr.vdoping cotm- Lrie,.

The Ftincl's most important obiccuve is to cnahlo oompl ianco with tho goals o( the development coumrics with the Jdclilional eiíort of clevelop- ing counlric~s. f'h<? hmd will also perniil the prauical verific<>lion oí 1he rPJI cnst <JÍ emission l'ecluctions in dcvcloping cou11trics a11d will bccon"'!(! a S()UrC:P OÍ 11C\N' l'CSOUl'\CS (or thcm, in ,1ddi1ion to íacili1,ni11g lhe wicfor p.1rtkipa1ion oí 1·hese COL1111rics in 1 hC' Co11v(~nl ion proc<~ss ,1nd f,Kili1,11e, in conlf'el"' 1enn~, lht' trcinsfer oí resources ;111d technology.

pcnalizc ;idditionally anrl inc.rnas- ingly rbose coururies lhat do not at.hicve Lh<~ i.:o<>ls that were ;igreed opon. lt is alrcady expectcd that various ind1Jstriilli1cd countrios will 1101 auain the origin<~I go;ils acoepted in rho UNFCCC. of rcducing thoir emissions in the ycar 2000 to 1990 emission lcvels.

Alung thc sume linc. a Clean Devel opment Fund has been proposed to

1 his proposal cstabl ishrd thr: prinrí- p,il of dilft'rt'11li.11ed rc.:~pon~il.Jilily uf thr.l countrics for global warming. ín virw of tho divr.r,ily nf population, ,u eas. <111d natural <111d ler.:hnologi ca I resources. The el i fferences between counutcs are rcrtccrcd not only in l<·1·rn~ oí gr(•t1nh<>US<' gds ornissions but also in tbeir cupacitv lo iackle th<~ problcm. Since thesc gases rcmain in the atmosphorc for 1m111y yc,1~ (150 vears in thc rn~e oí C02), it is ncccssarv lo veriíy thc irnpacts of en' issions o ver tho l;isl ·1 .'iO y<';J rs to rklc:>rminP hoth thP historical ,,,1cl [uture responsibilitv uf the countries. The industrializer] counrries (Partius to Anncx 1) must bcar thc groatcst burden of responsibi 1 i l y ,,,1d shou l el reduce their ernissions in this stugr.l oí thc Convenrion.

l'hc Clc:111 Devcloprnent /v\r,>ch;mi~111 (CDM) arosc írom llrazil's oroposal to define clcmcnrs of thr Kyn10 Pm- tocol s11hmiur.d 10 1lw UNrccc Si;·c rtl<tri,1l i11 M<iy 1997.

(lean Devclopmcnt Mcchanism Jos,; l)omin,gos (;n11z;í/e1 MiBUl'l., /utvisor to 1/ 1c Minister o( Scicnt'l'

and Technolo¡¡y oi Braúl

ncw response is rcquircd to motívate this action. Confronted with this challcnge, thc Clcan Devcloprncnt lv\echanisrn (CDM) established in rhc Kyoto l'mtocol provides a win- dow o( opportunitics for thcse countries since by trading ccrtificd emission rcductions. the rlow of capi!(ll helween the North a11d rhc South wuuld be thc (inancial bridge to rransfer tech11ology and maximize profltabilítv and cornpctitivcncss of rencwable sources, This is rho linkage betwaen ~nergy, climate, chango. and susiainahlo dovolop- mont.


·10

·15

20 2010

·25 2020 11'2030

JO

35

'i:.~~il,OI ~~f,~O

=wr o

Annual GDP reduction in 1 o~> US$ compared to the reference protectionism case

~~\i) ~,µ.#·" ,..,_,_..___,,,,..,.,_.,

The chMl shows 1hc difíer<•ncc h<)lwccn thc GIJP for tlw rcícr('IKC s~e11Mi<1 (without ;ip¡1lyif)g thc Kyoto Proto<:ol} a11u tlw >(••11Mio th;1t inrlu<lcs co111plin11ce wilh lhis Pro·

The figure hclow provides ;~ rough estirnare of rhc abovc-mcntioned impacts on gross domostir: product (Gf)P) oí scvcral Lati» Amencan counrrics, calculated u~ing thc ínter- national lmpac1· A;,cs,ment Model (11/\M}. This i> .i compu1eri1cd gen- cra 1 cquilibrium model dcvclopcd by Charles River ;\s;o<:iatcs, simu· l,11 ing lhc perforn1,111ce .rnd inter- rclation oí the econo111ie> ol 1\0 c:oun 1 rics.

own territories. Another possible positivo impact for e1l'1erging economies will be; thc riso in their competitiveness, since they will no! havo to make addínonal invcstrncnts aimed at reducing ernissions.

In addition, theso policies ;inri mensures could exert certain positivo impar.ts on dcvcloping countrics. Sincc ibere will be? constraints on emissions in 1 he i ncl ustrial izod cou n- 1 ríes, large energv c(msL1111c1 s will try 10 ínstall their íocilities in rlevclop- ing countrics. Tho resulting beneñt might be countcred if industrialircr! counrrlcs dccrdc to aooív prorcc- tionlst policies to silfr?guard rhc jobs crcatcd by these cousumers in rhoir

tion in the demand ror labor and capital, reduction in salarv levels and return on capital and, thererorc, decl in i og i ncorne ;i nd st anda rds of 1 iving. Th is wil 1 affect both their exports. whosc prices will increase, and thcir irnports. whose volumcs will probably decline. The lesser availability oí rcsources in the indus- triali1cd countrics will be affecting the volume oí their invcstmcnts abroad.

12

!\ predir.tahlc consequencc in thc dcvr lopcd countrles is thc higher cost (or the produrtion of goods and services. which will imply ~ rcrluc-

Thc po 1 icies J nd mensures adopted by tbe industrializcd counrrics to complv with their l<ynto Protocol commitmcnts m<ly exen an impact 011 i nterna iional tradc a 11d thcrefore 011 llw devcloping countrios. ·1 he intcrnational oil markct could be <1ÍÍt'Ued by the possiblc substiuuion of coal for oil .md oil for gas arul a wirlcr panicipauon of rcnewable encrgv. /\s a rcsuh, the world dcmand 01 crudo oil and oi 1 prod ucts cou Id dc:c 1 i ne, j usr 1 i kc rhc priros at the level oí producers.

Possible Ec:onornic lrnpacts of the Kyoto Protocol

uns vilienucvn, Director o! Elec- 1rici1y, :VJinistry of tncrgy ,111d

Mine». veneruet»

Sustatnable Developmenl


13

Ncvcrthclcss, it is importi'lnl 10 bcM in mind 1h,11 fin,111ci,1I cosb 1.,111 ,ilso b<> importnnt, be(,1l1Se ther<.- .ire n1any trnditi<>nt11 n1c~chdni~n1s ínr fi n<1nc i 11g ckvc.dopm<~n 1 pro jects, botlt i11 th<' priv,1tc S<'ctnr and in thc bilateral dl'HI rnullilaleral clevelop- mcnt financing <1rc11a. 1 ltcreforc, il nt:iy be,oine netessil•Y lo ,idopt dií- f ercnl cost accounting systems f<.>r different lypcs of projccl fina11cing. How increment~I cosl~ will be c,11- culated under the vJrious poi icy mcch~nisms 0111 linP.d in lhe Kyoto Protocol for 1 imiting greenhouse gases is iln in1portant issue 1hat h(IS nol yel been dccidcd. Q;

rhe (; 11 idcl i ne< rlevel oprrl by UCCFF retun1111e11\b tite use of t'<..u· nomidso<:i<1I costs i11 c<tlculotin¡.: tht;> i 1H·rcmen 1,11 m iti gnt ion rosls, ;md il provide~ Ílll'llu:r guid,111<.:e i11" m1111

bcr of arcas for cak·ldntinf( lhCSC' C'O>lS i11 sut:i,tl <..tJ>l <ll.<..OLllltill¡\ lcrn1s. This appro:ich is con~islC'nt with ¡¡ lOSl-be11t'Íi1 <11Ml)'>i>.

costs. Privale cos!s ""~tite oµpurtu- nitv costs that arise in competitive markets ior factors oí production, goods, and s<;rvices. Thé?\' are called prívate costs bec:aus(~ (?conomk a¡.:enls bc<tr thcsc costs directly as a conscq ue nce of thc ir <?conom i e acLivities. l1o"vevcr, there dre situa tions when the ;ictions of econo1nic agcnts affc<:t other cconomic i1g<mts. but the economic agen1s respu11;iblc for these eífects do not have be<1r thc cost of thesP con<t'<°il•ences on othcr;. These costs are known ¡¡s exter· nal cnsts, bccause they arr. cxternal l<> th(~ ec<>1101nic <1gen1s \•Vho give riso lo them. An obvious cxa111plc oí cxtcmi11 c.ost is the v,1l11c· oí th0 llllCOlllJJCllS<1tcd dcllflilJWS th.11 ocnir as a rCSlill oí <iir pollulion. l;iken togcthcr, o;oci,11 CO$l> rcp1 c.:;c11t 1hc.: su m oí private costs o nd cconomic rosls.

Latin .e..rncrican f .. ncrg~1 Otg?niu~:1c11 • OLADE

Fconomic costs consis! of lwo ele- rnenls: private costs and ext<.m1;¡I

1! is i1nµortanl 1>01h 10 cli~lingu i>h bctwccn fin,uici<ll cosls ;111d c<'O· no111ic CO>l>. Fi11a1Ki<tl cos!s are besl Lmdcrstood ns out 1 a ys oí moncy, or the observed íin<incial 1r,111saclions th;.it toke pl;,ice in Jll projcct phascs. Economic: cosls rcprcscnt lhc valtJP. of the re~I resource> íore¡;u11l' wht•11 a project is undert;.iken. The two costs are idcnti(:al only unrkr ide~I circLunsla11ces, "vhen rnarkct~ ftr(? perfcctly compctitivc ;incl thcrc are no markel íailurcs.

According to thc CEF, thesc? costs can lx' defined as the ,1dditiu11,1I cust that i~ incurred when L111clcrtaken with CFF íina11cing, compnred to the <'OSI of 1fw more pollLJling µroje<.:l 1h;1t would olhcrwi<c h;iv<' b1~r.11 bl1il1 wilhoul tite fin;im;ing. Once¡¡ C0\11111y has cnlcul~1cd 1his <'<lst for ;i Rr('rnhl">lll\~'4 g,1s n'liligtlti<u'I 11'1t)í, ..

;L11·c, it <.:,111 divid0 thc i11<.:remc111,1I cost of thc projcct by lhc average a 111111~ 1 rNl11ction in green hou)e g,1s emissions for the project. This C(ll r11l<11ion providP.' ,111 esti111,11e of the increnient;il cost effectiveness oí '1 prnj<>it. anrl r~n bP 11sPd ,is r111e. oí th<: y<trtblit:ks for r<111king <l m1111her oí diffcrcnt mitig<:ition projccts.

Thc UNEP Collaboraiing Centre on Energy and Environment (UCO:E) is currently assisting a number of dcveloping countnes, includi ng Ecuador, Argentina, and Chile: to estimare thesc incremental costs. As a part oí th is work UCCE ~ has dcvol- oped a set oí general guidclines.

accomphsh this objective. Under the Frarnework Convention on Cli- mate Changc, rho ( ;EF can provirle assisrance to developlug countrics by financing the "incremental costs" oí projects that reduce greenhouse emissions.

Thc Clobal Envimnment F;1cilily (Gí:F) was established. in pan, lo

Thc phcnomcnon oí global warmmg is <l { asebook cx.irnplc of an cnvi- ron mon 1~1 externa 1 il y. Bec<tuse the use oí rhe wasto ;1s,imil:11icm c;ip;l<:· ily of tbc atmosphorc is free, [irms anrl individuals have no market related incentives to consider the atlvcrsc imp;1rts of releasing greenhouse gast:s into thc aimosphcrc on other tirms anrl individuals. To cor- rect this cxtcrnat itv, it is ncccssarv lo use polky instrurnents that pffpr(ivP- ly "internalize" litis cxtcrnality so that individuals and finns will havc incentives to rPduce lheir greenhouse e111 issions.

Main Concepts in the Assessmem of lncremcntal Mitigation Costs

Jvlm M. Cdf,1w,iy, UNEP Collebo rtuing Cemcr on Cncr¡i,y and In vi-

rnnm('n/, No,kilde, l?e111iwk

1 he proh lcrn of el ímatc e hangc ami possible global warming is rel.uivelv new and dcaling with it will require much efforr on the part oí rhc intcrnational community, In view oí the growing glolxilization oí markets, thc act ions or n0gl cct nf ;rny cou n- try rn,1y C'XC'rl cconomic imparts 011 the othcrs. l'hc cnvironrncnral con- Sf'(]utmces oí emissions oro <liso global and indcpr-ndcnt of the coun- 11y (rom whero they come. Withi11 thi~ Iramework, mitigalion of climate c:h;ing<' will rcquirr- innovatlv> <1ppro<1d1es with equitable. but atso cffectivc and rimclv, soluuons lor ali pnrtios.

tocol. with direct measures being applied in the developed countries, assuming that the industrraliz ed countuos wil 1 apply protor.tionist measu res lo preven l thei r cornpct i- tiveness from being affecred by countries that have made no com- minncru tu reduce thcir ernissions.


1 "

Likcwisr., as a result oí the Govern- rnent's firm action, it was possible to P.nsure, during this period, thc start- ~'P íor the cons1ructio11 oí a sul>stan- tial set· of power ¡;cneration projccts, the contracting of various hydropowcr and therrnoclcrtrk plans, as wel 1 as makc µo~sible a laq.:e numbcr of ncw power genera-

The magnitude of the efforrs made and resutts obtained in slightly more than 40 months of implemcntation oí the above-mentioned Sector Expansion Plan are evident in the rise o( capacity effectively adcied 10

thc system during the period ·1995_ 1997, which was on the order o( 6,000 tv\W, equivalent toan annual average oí 04~/.,, which was higher than the annual average valuc recorded betwccn 1991and1994.

adopt, at the beginning of the sector's reform in 1995, a set of practi- ca! mensures to facilitate the invest- menrs required to expand the country's power generation facilities, with the bread participation of the priva te sector.

Leuo Americen Energ~1 Orga11i2ario;1 • OLADE

s

In vicw of this extraordinarv growth íorecnst, thc Govornmen¡ hacl Lo

With the start-up of the Economic Surllilh!Jlion Plan, electric powcr consumption grew by 17%, compared to a GDI' expaosion on the order of 11%; íor the period 1997- 2002 a growth of 5.3% is being (ore- cast, compared toan estímated GDP fluctuatlon oí 4.7%.

92% of Brazil's electric power system is baserl on its hydro resou rces. and its installed power generation capacity is on rho ordcr of 60,000 MW, accounring Ior more than 40% of rhe total íor South America.

Overall rho country accounts ior 47% oí Sourh Arnerica's encrgy consumption, owing to the size of its domestic market and the magnitude of its diversifled industrial infrastruc- ture.

Electric power industry

toward privare-secror investors, whether national or foreign.

The dramatic reduction oí the Srate's investment capacitv in recent vears, with its resulting impact on the security of expansion of the countrv's energv inírastructure. in association with the progrcssive loss oí eíficien- cv oí its siaie enterprtses, have led thc Covernment to takc thc sound polulcal dectsion, in earlv 1995, to restructure and pare the State's involvement in the sector and to applv a new modal oí openness

ver the tast few years, Brazil has experienced high rates oí cncrgv consumption

growth as a result of the recovery of its economic development, involving the incorporation oí a substantial amounr of new consumers into the market and new consumption requircments corning frorn the increasing purchasing power of lower-incomc social groups, Thcse impacts, as a whole, can be attrib- ured to the Economic Stal>ilization Plan implementcd by the Govern- ment since 1994. Brazil is at present the world's eighth cconomy in terms of gross dornestic product.


In 1998, the power generation asscts oí thc fcden1I utililÍ0> will begin 10 be sold. Among these util- ities, there is El ETROSU L/G[RA-

Ky iho end oí F19H. il" (orccast that p1 ivate-secror participation in the power d istribu ti on segnl<'nl wi 11 be close to 70'Y, •. ll should lw {'mph.1- sizcd that. in th<' privaliLalion bidding prorcsses íor the power distrib- ulion comp;iniPs, ,, surplu~ on the order of ·10% <lbove the minimum s~ 1 P pri ce was recorded.

111 support of thc~ abovc mentioned sector rc>ln1l'l111fog artions. the Government is i1npl('111r.nting a widc-ranginj; eleclri(: power ron- ~<?~sion prlvatization progr.un (fcd- er;il ami Í<!derM<'d s1;11<•s), whcrebv it has transferrod, in le>> than rhroc ,,11(1 ,1 hall y<!MS, close to ti 7 oí l1r<17il's clccuic pownr distribotion markct to rhe priv.uc s<.:clu•, ,1 111,1g· nitudo cqurvalcnt to the clcctric ¡JuWt'• 111Mk01s of thc othor countries oí MERCOSUR. in ,uldilion to rhose of L1olivia, l'cru. Ecu,1dor, and Chile, takon as a wholc.

The creation anti start-up of operations of tho NationJI Electric Power 1\ge nry (l\gcnciil No e io na 1 de Energía [l(!octríca-ANHL), ,111 a utonomous ,111d i ndopcndcnt i nst i- tution in charge oí sector rcgulation and suporvision, should abo be mentionc.d.

lh is work is bcing carried out by mea ns of a broad-based consultan- cy 111echonism and thc intense par- ticipauon oí differcut sector plavers, which will pcrmit rapid progress in ihc dcfiuition 1rnd unplcmentation of other conceptual elemonts such as Indcpendent powcr p1 orlucers (IPPi. índcpcnderu svstem opcraiors. basic morkcting rules, ancl the estab- lishment of thc Electric Power Bulk M;nket.

16

Minister of Minos and Energy of Brazil, Raimundo Mendes de Brito, is playing a

leading role in restructuring Brazil's energy sector and is a major promoter of

energy integration in South America.

Elcctric power sc>rtor rcstructurtng relics on support lrom intcmational ronsultancv activitics conducted by Coopers & tvbrand and inc.ludes, arnong its achieverncnts, importan¡ changos in the l<"gal íramework with the inrorporaiion of new elerncnts such as free access of prívate-sector ínvestors. infernal compeutivencss, and cnbaoced global competii ivo- ness.

Th<~'<' i 11 i l till ivcs cccooot ior viuuallv 72°/., o( thc tot;il schcduled i11 tho Scc tor Ixp.ms i 011 r l ,1 n

, for ·1 9911-2007. which involves invr-stmcnts on the orrlcr uf US$ ·15 hil- lion, oí which 70% wil 1 come [rom Iht: priv.uc sector.

tion units. which, <l' wholc, will íncorpor.uc <1

< .1r.1f"ity oí more than 26,000 MW to thc roun trv's power 1;t>11ern1 ion i11irastruCll1re by tho yc<11 2005.

Corumba 1 hydropower station. State of Goiás, commissioned in June 1998. with a power

capacity ot 383 MW

Spotlight


17

Whcn it rcachcd a production lcvcl of ·1 millio11 barreis Jl('r day Jl tho ond of 1997, l'CTROl3RAS was rankc>d as

Thc cxpcctatíons ol the BraLi lían Covernmem with rosuect to the oil and gas sector is that it will receive a considerable rlow oí invcstrncnts in hoth the upslrcarn .md downstrearn, which will lead toan oxpansíon of i 1 s act i vil i es a nd il n i ne rcn '-L' in domcstic rompctüton ,111d interna- rional compet i 1 ivcnesc.

Thc Narional Petroleum Agency \Agencia :-..1ac:ional de Petróleo- ANP), which is now func:tioning, is currcntly appraising oil and g<1s production and exploration áreas ihat wifl remain in thc hands of PETRO- BRAS and those áreas wherc it wifl be possible fur other companies to part ic i pare.

1 he trnnsformarions iruplemcntod to rlatt' in this ~C< IUr, ovcr rhe sbort-term, will open up opporrunitics for privato- sector invcsuncnrs, IJcginning with rhe suhmittal of oil and g.is exploration hlocs in tlw countrv's scdirnC'11t;iry bosíns by mcans of hirldi 11g processes.

Brazil's oif anrl gas indusny was. for 44 years. subject tu .i monopolistic regime, wilh activitios in thc sector bcing reservad cxclusively íur rhc state oíl companv PETl~OBRr\S. With thc ratification of Constitution- al Amendment .-~o. 9/95, this exclu- sivcncss was abolisherl and thcn rcgulated by 111e;111> of l.aw No. 9.478/97, which provides íor sector openness to prívate-sector company participation in all acrivines of the productiva chain oí this industrv,

Oil lndustry

1 hi; vcar, therc will afsu be the pri- v.11i7n1ion oí the l'ower lJtili1y Com P•illY oí Sao P~ulo {Compañla tnergética de Sao l'aulo-Cf.SP), which has 11 powor gencration iníra-

structure oí 1 0,000 MW and is thc l;i1W!'t of rhe powor conccssion holdors oi the f0der,1ted ~late~.

Afrerwards, the asscts of the other íedl'ral power generarion uti lity «ompanies wifl be sold: FURNAS 17,500 MW), ELETRONORTE (5,500 M\1\1), and CI IESF ( 10,200 MVV). The privatiz at ion model íor cach one of them and rhc respective mín- imum prirc>s are currentlv being ,1ppr,1 iscd.

SUL, whose insrallcd capacnv amou nrs to 3, 700 M\N (close to 11 % nf the total capacity of the ELETl~O- !lRi\S Svstem).


18

As íor natural gas, Brazil's goal is to increasc its curren! share of under

/\t the sarrio time, the energy sector poi icy is cnvisaging important changos in the countrv's cncrgv matrix. aimed at not 011ly vatuatiog and rcgionalizing different national energy resources but also íncroasing thc share of clean and renewable encrgy sourccs, in compliance wirh irucmarional commitments.

Energy Poi icy

from the refineries of PETROBRAS, which ranks as the world's Iourth companv with open capital in tcrms of refining capac:ity.

Al the ond of ·1997, Brazil's refining instal lations had a proccssing capacitv of 1.79 mlllíon barrels por day, of which ·1.77 milliun carne

Brazi l's oil and gas product ion is accompaoied by a significant increase oí reserves. Hrazilian oil and gas imports over the last few vears have beon coming increasingly from thc region itself.

the world's seventh largesr oil «om- pany with open capital. With a production that is forecast at 1 .5 mi Ilion barreis pcr day by the year 2000, tho countrv cxpects to reduce its externa! dependence on hydroca rbons from the curren! levcl oí 40% to 2S'Yo.

Spotlíght


Thc balance oí rcsults obtaincd to clatP. in this amhitious sector restructuring program. bcing con- ducied by Brazil. not only reveals clcarlv the urneüness and effective- ncss oí thc policics hul also c:on- Iirms, in addiuon, the credibility that thcso govcrnmeru ac.tions havc gaincd with the diffcrent pnvatc- sector economic plavcrs. who havc

Dr. José Luiz Pérez Garrido cxccutivc Sccretarv of the Ministry

of Mines and Energy National Coordinator tor OLl\0[

in !Jrazil

decislvely contributed Lo achicving recent success. o;

and most traditional trade partner in the area. Reg<irding this, the importan! role being pcrforrncd by Ol ;\IJE and bilateral agencies in supporting rhese initiatives. which wi 11 havo to be broadoncd in com- i ng years. must also be recog- nized.

In this highly dynarnic scenario, omphasis must also be laid on BraLil's energv integration efforts with other countrtes oí the región, cspcclallv Bolivia, Argcnti na, vcnezuula, Uruguay, Pnru, and Paraguay, the tauer as irs oldest

3•¡,, to ·1 2% in the year 201 O; the gas line projects bctwccn Bolivia and Brazrl and Urucu Gas in the Amazon rcgion, as well as other projects, will contribute dccisivelv to achievi ng this goal and wi 11 enable an extensive thermoelectric power gener.uíon network of installations to be consolidated in the cou ntrv and growing industrial dcmanrl for this tuel to he: mor.


Variou~ 01h01· prn- grams have bc~n dewlr)1 wd ÍOI' in(lus tri,tl ólnd environ· "'"1)\al satéty Md to en~ur~ t<llional U$t)

of energy. .unoni; which thc followín~ is notPwtHlhy; thc National Pro¡¡r,11n (01 tlw R,11ional izatio11 of Use oí O i 1 Prod- ucts and Natur,11 Gas (CONPF 1) undcr the illlSl)iCeS oí lh<" Mi n- i~try of Mines ¡¡nd Encrgy oí Brazil, and in which Pí-'I RO-

B RAS acls as Exccutive Sccr~tariat. This prograrn is being implcrnented on v¡irious fronb. with instilutional <1Clions and specific projects for the transporta! ion scctors, accou 111 i ng for close to 50% of diese!. industrial, re>- identiol, commerci¡il1 agricultural and livl'Slock consurnption <rnd íor gas- fired thermoelectric power gener<1· tiun.

Natur<tl gas is among thc Company's most 1101eworthy activitics. /\ íorecasl involvi11g dernand on thc order oí SO million cubic metcrs rer day over the nexl ten ycars to rnect lhe country's needs in terms oí clcctric power system expa11sio11, cogeneralion in ils refineries and operating uni1s, and the growing consurnption of this clean Íl1el, has led PETROBRAS to increase its own exploration and production

20

l'ETROBRAS has more 1 han 7 ,500 oíl <111cl gas procl oct ion we] Is, o l 111os1 1 00 mari ne oroducrton platfonns, <1 network oí close to 12,000 kilometers of pipelines, and one 01' the largcst oil fleets in the world, with a net capacity of 7 .63 billion dcadweight tonnage (DWT}. u also has 53 tcrminals wíth a srorage capacitv oí more than b4 rnillion barreis of oil. 2 fertilizer plants. and 11 refineries. Thc claily freighl being proccssed is closecl to 1.37 million barreis of oil, with ;in installed capaciry

Petrobras is rommüed to irnplementing a sustainable development policv. ll i' the onlyoil companv th~t has received two or the most presrigious certifications in spocialized arcas: the ISO 1400·1 Ior the envrronmeru and British Standard HHOO tor hoalth and satetv o 1anagen te1)1. Thc ccri i fi<:.-1tion ene ompasscs a ll explo it._lf ion and prorh« tion <1c rivltics in one uf 1IH•

\>Vprld'~ most delicatc~ t'COSY~lCI 1 \~, tho Amazon ra in (orcst,

aod to look for complcmentation with its neigh bori ng cou ntries. such as lfolivia and Argentina.

In addirion, it provides bunkering services along 11,000 ktlometers of Brazilan seashorc and handles 34.3% oí the Brazilia» market for oil products with a network oí 7.100 servir e statior» with us subsidiarv BR Distribuidor<1. 11 also produces special tuels, such as <i high-ocraue gasoline and je! fuel. in addition to high-qualitv luliricams (or E'Xpon.

of more than 1 .H million barreis per day,

Accordiog 10 Potrountn: 1111l'lligo:1>c:<' Wenk/y's rnnki ng, the comp,i1))' is now the íiítc1•111h l,irgcst oil cornpa liy in thc world, owini; 10 its oílshor•· terhnolol.\Y e apabilities. whkh have ("111r,1cl('ld varíous compames intcr<>''''d 1t1 <'Sl,1blishin¡¡ new partnersh i p~. 1' o 1 ess than 4j% oí Br<11il's oil r~>i·rvcs are locatcd ,11 more thM• 1 ,000 n1r1cr:, under -tPfl, where 1hc world's dccpcst prod uct ion w<.'11 can be Iound ( 1,709 111CL<'rs).

whon il reached a production level oi 1 million barreis of oil per dav in earlv 1991\. f\razil's state oil company Petróleo Brasilelro S.A, (PE 1 ROBRASi becamc a member oí 1 hat selcct group oí oil companies in tho world that hokls thiS record. In three more years, PETROBRt\S intends to rE'ach ,\ production k•ycl of 1.5 nullion barreis oí oil per dav, thus fulfilling its mission to contribute to HraLil'' devolopruent.

PETROBRAS and Oil Development in Brazil

Spotlight


latin American Energy Organization Av. Mariscal Antonio José de Sucre N58·63, OLADE Bldg., Sector San Carlos

P.O. Box 17·11·06413, Quito, Ecuador• Phones: (593·2) 597-995/598·122 Fax: {593·2) 539-684

htpp//www.olade.org.ec • E-mail: [email protected]

The most complete and updated information on the energy sector far 26 countries of Latin America and the Caribbean

Energy-Economi e lnformation System

Decision making

with the latest

information Energy sector forecasting by country up to the year 2020 • Energy prices • Energy proeueuon alld ríemano • Required energy facilities and

tnstauauons • trenos of the maJor economtc

variables • Eovironmental impact

Complete historical series from 1970 to 1997 • Energy reserves • Energy potential • Monthly príces and tariffs or all energy

products • lmport and export onces ami voiumes • Energy productíon by source • Encrgy consumpuon by sector • Characteristics ot eneruy equípment

ami ínstauauons • Performance and índicators of the

maíor enerqy-ecnnormc variables Evolution of environmental pollution tevers


J)onlini<;rm l<epubli<· r:'t"'"';ch n/cal ~y~.,,,,fr,.,,,.,<¡ ,(/fi,. Ojf rt• <-j'!lu· :'.Jl.'HJl¡.(,.n/

Alter more than " d~rMI<~ oi this proccss, il is 110w worl hwhilc 10 review ií this proccs» li,1~ ochicvcd its objecnvcs and if thc course (akcr is learling lo sustainabilitv.

Alongside rhese roforms. rcAional bines wore consolidaterl leadi1)g le a rise i11 tradc between neighboring counirles ,111d tho dcvelopment of large scalo i1ll~·gr8licin projects.

tlw (oreign dcbt crisis. Tho shiít Irorn t he overi nvosrmcnt oí thc scv- en tics to rnajor invcsrmcnt lags oí the t?ightics produccd servicc supplv problP111~ i11 the early nineties. Thcs(;' prohlcrns írwolved nio>lly <~1 backs in th1• construction of projects and collateral <'ffC?<'tS.

preview

o\ade 22

Owing to ib charartcnsücs. 1h0 ekx.tric powcr subsecror was one oí th<> scctors most scverelv a üccrcd by

ThP <'ncrgy sector, which i11 1 'IH7 accounrcd for "13% oí the forc•ign dcbt or thc rcgion's couuu iP.,, has been (or m,111y yoars and continuns 10 be thc targer of major reforms ~imcd at making it more competi- live anrl auractlve Ior (oreign and domcstic prívate-sector ínvcsuuent. In addition, rhcre is the prcssing need to cxtenrl thc coverage and quality oi energv scrvices to thr.- po¡)til<ttion ihat (ailed to benefit (rom the soctor's dcvelopmcut in the scventics.

In thc mid-cigh1if),, a periocl of pro- ÍOlll1d changos i11 tlw economy of l.;il in Ameríca and the Caribbean bogan as a rcsuh oí rhc cxtornal dcbt rrls is.

E nergy, trade, and sustainable development


23

*** * * * * * * ***

Sponsors

Laüu American Enerqy o~g<1nization • OLADE

Ministcrs and officials from the encrgv, cconomic. ond íina11t:i<1I sector; oí ihe rcgion, congressmen and poi itic¡¡I figures, executives and rechnical oxpcns of publk: and privare instituiions or corupanies involvad in the energy, economic. a 11d fin anc i,1 I sectors, businessmen lrom the membcr counrries of Olr'\DI: Jnd (rom ovtside the reAion,

On November '19-20, 19913, in the same facilities, the XXIX Meeting of Cnergy Mi nisrors oí thc member countrics oí OLAl)E will be held, thus bringi ng together for thc íirsl time the 1wo mosi important events or the Organizmion. both focusing on past and futuro cncrgy sector rclorm proccssos in thc región.

non and sustainable dcvelop- menl: and

• promoti ng business and i nvost- ments in tho cnergy sector of 1 atin America and rhe Caribbean.

BID World Bank

• roviowing !he Ctm ent st,1lu~ <1 nd prospccts oí cncrgv sector transfor m.ition procosscs and their mseruon \•VÍthi11 el frornowork oí gloh<1I iza-

The Conícronco ilnd tndus- tri al l<•rhnofogy Fxhibi- rion. whi; h wifl tnke plotw in tht• ,111di1orit1111 oi llw c..,nti.tl B<111k oí 1he Dorni 11ic.111 l~(vubfic; are csscnti.illv oimcd at:

Wi1h support from thc Icchnit:al Sccrctarlat oí the ( )tfa·c of rho Pres- idcnt <>Í the Oominican Republ ic, the lnter-Amcrican Development Bank (lüll), the World Bank, and thc European Commission (l:C), Ol/\l)J: has srortcd prornoting Enerlnc '98, which has caught the intcrost of various cncrgv <r-rror pf,1yr.rs i11 1 atin 1\rncrk,1 and the CHibbt·nn.

The issue oí rcíorms and integration, wh ích is oí i nterest not on ly for the region's countries but the cntire international cnergv cornmunity, has been chosen as the central topic of OLADE for l 99B, thc vcar in which it celebrares its twenrv-fifth anniver- sarv, This topic will be reviewed by tfH, XXIX Meeting o( Ministcrs of OL1\DE and the Fourth Energv Con- (erence of Latin America and the Caribbean ([m?r/ac '98), cvcrus that wi 11 be taking place in Santo Domingo, in thc Dormnican Rcpub- lic on 1'-:overnbcr 16-20, '199/l.


lnlernational prices of energy, espe cíally fur oil and products, display sharp and conslant fluctuatíons, which are a risk for both proclucc~rs and consumers. Because of this, sorne companies, frorn both the public and prívate sector. find tha\

l'rc-Conference event Energy Risk

Management Scminar

The events associated to Enerlflc '98

Ata special plenary scssion, sched uled (or November 19, both rhe par- ticipanrs of E11erlac '98 and the XXIX Meeting of Ministers oí OLADE will be analvzing jointl\' the Contra! Topic fer 1998: Results of Modern- izálio!l Proccsses and Energv Inte- ¡\l'jltion Prospects in Latín /\merica and 1he Caribbean. M which time the indtcators Ior these processes wi 11 be presented and possible medlum-term sccnarics and trends wi 11 be Iocused on.

Central Topíc

that has vet to be done in this arca.

• The opportunities to maximize the sector's contribution Lo the sustainable development oí the countries of Latin América and the Caribbcan.

24

• The impac+s uf globalization on encrgy industry activitics in the región,

• The requirements of decision makers al thc political and business level in thc light of sector forecasting exerciscs.

• The reasons leading to energy sector modernization and restructu ri ng, as well as the work

Central presentations of Enerlac '98

officers oí loan msurutions and ínter- natíonal cooperation agencies, representatives of universities and research cenrers, executives of regional and extra-regional corn- mercial banks, representatives of the media, and regional and international public opinion leaders are being invitcd Lo participare in the Coníerence.

Enertac

The central presentatlons <)Í the Conferencc will tako place dur ing the essions of NoVcmbei' 18 ilfld ncl will be dclívered by

acling íigures of tbc aca- demlo, politi<ip,I, and

business commu- nities, as wcll

as multilat eral banks

and other d e ve l- opment insti~v· iion1~. ~ . ..,..kl he events assoctatcd lo Enerlac '98

Jr~ thc pre-Conterence Encrgy Risk Ma11age1nenl ~cminar, being spon- sored l¡y lhet~ew York Mcrcantile Exchange..(N'l'MEX); thc Seminar on

. Elcctric P~wer Subsiector Modern- b 1 e j,4,lltiol) in Latín Alll~rica and the

th p r~·- tQ'riJ.ilSe¡in, shor~sor<kl by rhe lnter- 1'<\! s o~ Améri~n D<·v~lo1r,'ient Bank !IDB)

li3'1t á dive si- anti the World llW'k; and the Semi· ·"'ºe'~""··". ver-.;lti,w ... of Oí1}.; pn Su~(áínfil>}le Energv for Sus·

1 thl'l. ~evelopmc¡:it ta~M$l1<élS, an IDB event con· ( ~ffi?r>eds ¡\7ic[ thc ch 1- derffiid within rhe frarnework of an

lcn'ge&.fo0ing he Latín Arneríca IDB program with the same name. and fS:ari~bean energy sector mg;i"1ing the following:


25

Hydropower station or ltaipú, the world's largest binational project, involving Brazil and Paraguay and whose installed capacity amounts

to 12.5 million kW.

The electric power subsccror modcrnization process in the region's countries displays a wide range of situarions, from total liberallzauon to powcr gencration, transmission. and distribution activities to the modesr participation of private-sector initiatives. The schemes for this participation and government regu- larions vary írom one country to another. The Serninars presentations intend Lo arldress the questioos that the above-rnentioned process has poscd in all oí its diversity:

the process of making reforms in the electric power subsector. Likcwisc, several scenarlos that facil itate the assessment of the results of the region's structural reforms will be explored.

Latín American Energ!ii' Orgflnization • OLADE

This Serninar which is being spon- sorcd by the Inter-American Devel- opment Bank (IDB), the World Bank. and the European Commis- sion. will be taking place on November 1617, 1998. lt is airned at analvzing the evolution and cumulative experience in those countries of Latín America and the Cari bbean that have madc or are in

Seminar Elcctric l'ower Subsector Modcrnization in latín America and the Caribbean

• Define trnining guidel incs in financia] enginccnng for national teams stncc this tapie is hccom- ing inrrcasingly importan! in the región.

• Make avai la ble to the partici- parus the progress achieved in the area oí risk coverage and its applícatíon to commodrucs (clcrtri<'ity, hydrocarbons, oi 1 products, and gas) and prescnt the experiences in these arcas.

This prcConíorcncc event, whic;h will take place on Novomber 16, is rcsponding to the manifest inrerest of the member countries oí OLADE, since it will contrlbure to the under- standing of Iutures markets in the bread markct of Latín Arnerica and tho Caribbcan. lts pri11ripAI objec- tivcs are:

Within t.his context, it is currently Ieasible to set up qual ified teams who can conduct sophisticated and accurate risk asscssmcnrs using instrumcnts for reviewing and man- aging financia! operations, which have arison as a res u l t oí new rech- nologies.

the mechanisms provided by ener gy futures markets grant an accept- able degree of security and they are therefore resorting with increasing confidence to these instruments.


On ihc h.t>i> oí the abovo, 11)8 fclt 1ha1 C11c1·/11c '98 would lw rlw ideal sragc for prescntiru; the t'XpNienn•s and progress achicvcd to {l,1te on th<' ~ubjt'C'I of sustainabilitv, As a resuh. along wilh OLADC, it will be holding et Seminor fonising 011 Sus- tainable [nergy on Suetainabl« Devclopmcnt. on Novomber 1718,

111 December 1 <J<Jn, tho lnrcr-Amcri- can Dcvclopment Hank launchcc the prograrn Sustainable FnPrgy fo1 Sustainable Markets in orcler te dosign and test innovative sust.iin. able energy distrihution models (erfi- cicnt use o( energv and new and renewable sourccs) 1h,11 rnight be appropri;11e for ncw competinve markets, ,1rising írom lile 1 egion's sector resu uct11ri11g ,111d reforrn process. Al present, 'IW<'ific projects are bcing implcmented in Arg<'nlin,1, Braz!l, rl Salvador, and Peru.

Scminar on Sustainable Energy for Sustainable Markcts

• Financia! insuruuons: What is the role hcing plaved by credit institut ions?

• Rei;ul.11ion: Are the clectrlc power utiliry cornpamcs tune 11onin¡¡ more c>íikicntl~·t 1 Iow can natronal reources be tappcd and valu.ucd in bu,ine" INm~t How can mJn.1gcn11mt I><' improv<•ci{ What are the next 'lCP> to be r,lkc-ni

• Socia ª'f.>ech: l tow has clectric power supply 10 low-inromc (marginal urban) -ectors and clcctric power < overage in remole .irca' (rural elec1rificil· llOn) cvolvedi

• fiscal aspccrs: \'\lh,ll has bcen thc fiscal impact 01 sector reforms? where have S1,1tc im:C"qmenl< boen channeledi

• l'ric5 and earnings: \A/hat are the rurrcnt príces of electri<:ity? \•Vh,11 i< rhe tx-nefit-risk ratio?

• •'-ew investrnents: Ar<' there new ínvestmcrus in the electric power sector? Where do 1'1cy come írom? What is the role oi ihe Statc?

26

Dominican Republic. tne tand where it ali bcgan, was cnosen to be the

host country for Eneríoc '98 because of the major reforms being

implcmented in ns energy sector and the hospitality ot its people

Enertac


27

As sud1, S,11110 Do111i11go. 1lw r;1pi- t¡1J of the l"Jominic,m Rcpubl ic, thc íirst coloniol cily of thc Amcri(\1S, wil 1 be thc: hos1 1or thc prin< 1pal co11·1n1cnH>l'tlliV(' <'VPnl:.. ('t'k•l>rclling

lh<? lwl'11ly-íifth ,111niwrs,11y oí OLAD~. Q;

Thc Dominicans are proud lo show to tlw world 1h.1t thcy are ,1t thc crossro,1.ds oí 1wo worlds, ~uropc and 1\11H·ric,1, 'i11r0 Chri'·luphe1 Colun1bus .incl fij, cle>Lendant' 1ransfor11H.:cl lhe country\ IHrril<>ty in thc base for thc <:pie ,1dvcnturc oí scttling lh<~ New \IVorld, Sinn• tlwn ,1nd 1hrou8hot1t it> l1i,tory, lh<: [)0111i11 k·¡111 RcpulJI iL l 1<1s prnil'r.:lt•d ils i111egr,11ive <1nd < uope1·;11ive spir· il, m:iki11g it .111 icle:il hosl Í(H tlw XXIX Mt'Cting oí MiniSICr> of OLADC ,1nd t:11cl'hr.c '98,

One oí ihe inost IJeautiful countries in the Cnribbean. the Dominican Rcpublic nllracts more than 2 mil- lio11 visitors each ycar and is now offoring its hospitality to thr~ pMtici- pants oí the XXIX MeC'ling oí Minis- lers oí OL1\DE ancl E11rr/11c '98.

Thc Dominican Rcpublic

Leí¡n Amer'cen Ene~gy C)rg<inizílt!on • OLAOE

Enerl ac '98 is b<~ing orgflni7<'rl <>\Ving, I<> il lt_1rgp extvut, I<> 1hc val u· ~hk support ,u1d sponsorsh ip of publ«, ,u1d p1 iv,1Lt'·>1.'tlu1 <.:Olll¡J,uiie> (tn(I institurions. involved in th¡¡ cncrxy sector. which havo ídt rha: th•> Conf .. ren< P 'oinride~ with ,1 turniru; point in tho tr.msformnrion procc~w' of this sector in L,11 in Amcrica and thc CMibbe,111.

Support from international agencies and prívate and public compantes

'l'ho buvinoss 1YH'Pti11gs will be i\

good opportunitv íor pulilic ,u1d pri- vo te-sector cntrcprcneurs 10 cstab- 1 ish conrarts with representativos of governments, imemationnl o¡.:encies, ;111d fi Mnc.i ng i nstiturkms.

The parricip.ints or Enerlnc '98 will havo tlw opportunírv of karning ahout anti promotiru; projects, as wdl as Ío'- tering frade tic' and conducting busi- noss. rnr ihis purposo, appointmonts will lle organized duly in advancc.

Business mcetings

For the Fxhihition rhore will be 40 stands installed in the hall adjarent I<) tho meeting rooms.

public, thc goods and sorviccs thcv provide to the energy market.

On 1h,· s.imt? p1vn*"'' of the Central Bank oí rhc l)ominir,in Rc•puhlic, .1l()11gsicle the s<.-%ions oí Enerlac '98, 1h~rc· will b<> .1n lnd11,1ri,1I Terhnolo¡w r.xhibitio11 where c111np,111iP' ,rnd in,titl1lion> will be clispl<'.l\•ing lo rhc porttclpants of lhc XXIX Meeting oí MinistC'r; oí 011\DF, C11erlac '98, anrl the gene1\1I

Industrial Tcchnology Exhibition

• Panel un the 111 tcrn.uional cxpe- r i<~ncc in sustainnblo encrgy for 'ust,1ini\ble markets with the par- l ic ipd lÍOl1 OI represe: ll<ll ives Í WI ll 11 )B, 011\l)I', ).1píln, thc~ ll.S. D('par1 rnent oí C111t.rgy, anrl lhl' Furoprvm ( .ommission.

• The devcloomcrn oí energv ser vire companlc-.

• Thc use oí rcncwablc cncrgy in rural areas.

• l'rc~ent¡11ion of thc IDl:l prograrn and the case studies or Argentina, BraLil, El Salvador, and Peru, in addition to other experiences in L<tlin América <111d the Caribbean. namolv, l:lrazil, Colombia, Mcxi e.o, d ncl 1 he Dom i nican Repuhl ic.

with thc dovclopmcnr of thrco major ropics and ,·1 panel. as rollows:


• ••••••••••••••••

For further informatíon: OLADE Phones:

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: Energy Magazine


29

Th~ 11&w sharé•holdinr, Sil'ucturc oí Sll'ETROL is in lhe proc:ess oí bcing established ancl is part of the country's cncrgy sector 1ran~fonn~11ion policy.

In ¡1 transaction that is cxpcctcd to involve ahou¡ US$4UO million, 50% of thc companv SIPL l ROL, an intcrnational "1bsidi¡iry uf the Chile's state oil company Ernpre,;i N.wion;il de Petróleo (fNAPj, which also operares in Colombia, Ecuador. f.gypl, and Cuinea-Hissau, cunong other COlJ ntrics, \.viH be priv::ltized.

Cl·llLE: OIL COMl'ANY IS PRIVATIZEO

Thc P v 1na11ltlllitlrl Govcrnn1ent ... 1dop1~(1 irnµort«nt dccislons to restrurlur(' it~ ctccuic powcr sertor. Tho duries thnt uruil April 1998 woro be!ing disr ha1'14c>d by thc lnstilute oí 1 lydr,1ulic Resources Md Ek:ctrificatio11(IRI1() will b~? cntrustcd to eir,ht new powcr utility companie;: thrcc distributfun utilitie' (Metro-Oeste S.r'\., ,'\Jor~'Slt: S.A., and Chirlqu! S.1\.), four powcr ¡;MP<,1tio11 utilitics (Bavano S.A., Bahi,1 Las 1'v\inas S.A .• Chiqliirí S.A .. and Fortuna S.A.), and one power uansnussion ulility (lr.111~111isión Eléctrica S.1\.J.

PAN AMA: NEW ACTIONS TAKEN TO l!ESTRUCTURE TME ELECTKIC POWF.R SECTOR

1 his initiativc will hclp 10 curtail lh~ hi¡¡h ,1mount oí spe1)ding lor oíl and gJ, i111po1'1\, which accoun1 for 60% oí 1•k•ctric power general ion, and will rap 1he 1111¡;!' potl•ntbl oí AcotlH:rm,11 ,,.so11r<:e< available in thc countrv (2.000 MW) anrl 1:1k<' ¡1dvantage of its t'Xpt-1·i1•11cc in manar,ing thc Momotombo Gii'olht'r111;d Station (70 MW of installcd capcclrvl.

1 he Minister-Dirl'Cto1· of rhe Ni< ~r,igu,111 Fncrgy lnslltute (INE), Mr. laimc Bonilla, i11forn1<•d that rhc ln1ergt:ol<>r111 Cnnscrtium. comprísed of companics írom Cerrnanv, thc United S1:11~,. ;1nd Russia, will beg111 building, i11 rhc geo1ht>1m;d field oí San Jacil\t0-1 i•Mc, onc of the largost goothcrmal plants i11 C:t>11t¡¡1I A11wric<1, :1t a cost of U$$250 million, wif h ,\ capaci1y c1f 1 n MW.

00 NICARAGUA:

1>ROMOTION OF GF.OTMERMAL ENERGY

The mínimum aciíon program, thc preparatioo oí which concludcd i11 Jt11H> 1 qqs, cstahlished actions for tho joint expansion of both companies on lht-? internatioual markei, the implcmentation of studies airned ar addrossing environmental concerns, ;1ud human resources dovclopmcnr.

Tho Chairman of the Venezuelan state oil companv Petróleos de Venezuela S.1\. (PDVSA), Luis Giusti, and thc Chairman oí the Argcntmcan stare oil co111p<111y vrf, S.A., Roberto lvlonti. signed a framework cooperation :igrc:>en1ent, in order to determino maior business arcas: partnership i11 heavv oil cxploitatlon and production: gas liquc:f:iction; wholesalc and (t-tt1il distribution and rnarkering of oil products: and business opponunules in lht.• petrochemical inrlustrv 11sing natural gas and li<iuicl ílo\1i;·s fron1 reflneries.

ARGENTINA-VENEZUELA: OIL INDUSTRY COOPERATION

l .aiin Amencen Ene(gy Org.uuxaüon • 01.ADE


In addition, thc Mines and Encrgy Burcau in(ori'ncd ihal, by 1ne..ins ni jo1n1 fundin! by tlw Hailian Cowrrm>Pnl in iho> Mnounl oi US$50,00U and thc Glob,11 [nvironment h1nd í< ;u) i11 the amounl oí US$350,000, Haiti will be c¡mying ou1 thc aclivilics cr1visa.gcd by the lJnilerl l\.alion~ Í-íillllt'VVOrk c:onvPnlion 011 Clin1alt Changes for ¡;reenhouse gases.

f\s of Oclohcr 1991.l, lhc ivel di;tribution rn111p;111ics opcr,1ting in Haiti will b( providi11¡¡ two lypP; oí (llllf',)c.led g,1soline for lht• rnarkct: r<cgul.ir 90 RON anc Super KüN 95. bolh of wh ich h¡ivc a residual lead contcnt oí u ndcr O.O"l 3 ¡VI. Thc price oí regol<u ga~olinl.:! 'vill rC:"1n~1i11 lhe ~;une (1:, 110\v.

HAITI: T{)W/\KO THE PHJ\SING OUT OF l.EAD IN CASOLINE

Tlh" 13unnc')~ 1\iu::o-·1\l\011tr-vi(h"u grl:-. pip~lirH" 'v\'(l' ,,\V~11·dt:td (Hl Ju11t" 1 (1 by rn1•<111' oí a public works conccssio11 ovcr ,1 :lO·yc«r pcriod to 1h1l con1p.1nic·, fl.l.. P.1 .í. and llrid«s l'ctrolcra Industrial y Comc1·ci«I S.R.L. 11 is cxpcncd th,11 ,, nMxirnum tcrm ol 4j0 days will be 11ccdcd to bt1ild thc ¡las linc <>s of thc subsoiption 01 thc concession co1W«Ct.

1\~ pan ()Í lhl: < <'>u1111y's s,1n1c n.~1u1,il g.;i.., ~xpc111:;.ioH pl.1u, thP st,lt<-' oil ( on1p,111y ANCAP h<>> startcd thc civil works ol thc ~M pipeline ol thc shorc a1 1hc hci~hl of tlw city oíl 'ays;md(1. lt 1s expectecl thJt work will extend ovt>r three to 1'iv(' 1no11th>.

Thc Unrgu¡¡y¡¡n consortlum Gauíil S.i\.·Luíirel S.1\., which i> ,1l1'ili.1il'd to P,1dfi1 LnlCrpri;cs of tlw Unitcd Statcs and l'¡u1<1mcrica11 EnC•l'\Y oí 1\1Acnti11<1, subnuued the besr bid in the internntloual public bidding oroccss conductcd íor the natural ¡¡as distributior, concess1on vio pipeline lnside thc country. 10 ¡¡w,)rd thc contr<>~I, ,1uthnrin1tiun frum thc· Cowl of Acco(1nts oí the Nation is expec1ed.

URUGUAY: NATURAL GAS EXPANSIÓN Sl'EED~ UP

1 ht~ new sysreru hri11g~ logc ... thcr the most highly populatcd bord<•r arcas oí both Colombia (District of Nariño) and Ecuador tprovinccs of El Carchi ,)ncl tmbabura) and will coruribure 10 solvin~ seasn1li1I electnc power supplv problcms in both ccunrrics.

Thc Prcsidcnt of Ecuador, Dr. Fabi.in Alarr ón. and 11 re ~ l'rc,.iclPnl oí Colombia. Dr. Ernesto Sampcr, rnct on Iulv 1, 1998 ar rhc bordcr oí thei r two couni rÍ(!S [or th<> slMl· (1¡) of ;i now power traosmission systcm built ilt a cost of US$ l I milliou, which will enable rhe exchange oí up 10 40,000 KV.

ECUAOOR·COLOMlllJ\: ENLARGEMENT OF ELECTRIC POWER EXCHANGE

News

30

For furthcr infonnation pfeasc comact Dilector or T raining and lnformatics

Lalin American Energy Organlzatlon Av. Manscal Antonio Josó do StKfc

Nse-63 & Fcmándcz Satvador, Sector San Carlos

P.O. Box 17-11-6413 Quilo, Ecuador

Phore: (593·2) 598· 122 Fax. (593·2) 539-684

.E..maiJ: f':'la.e,[email protected]

~lade

UC THE UNtVERSITY OF ~CALGARY

Canada

THE PROGRAM Th~ p1ograrn conssts of courses in non· ronowoblc ond renewable c·iorgy systems: air. water and land poll111lon and thelr impacts: energy economlcs and planmng. env1ronn10nlal r.i~k assessment. arwiro11me11tal n1a11agttme11I lools to1 oro¡ecl developm!ll>I en•1ironmer¡tal low in tho energy sector: and human resoerccs managcmcnt and stralcgic enwonmental planoing in energy organi· zatlons.

Applications trom protessonats of gov· ernmcní ano the private sector are invit· ed for parucpation in íne Third Mas!er's Oegree Program in Ene19y and t~e Erwi- ronmem offered by tne Un1vers1ty of Calg•ry ano the La1in Amanean Ere<gy 01garnzalion (OU\DE}, wilh support from the Canadian ln!e1naliona1 Oevel· opment Agene~ (CIDA}. The 14-month course bog1ns in March 1999. 11 includes advanced coorsas and semi· nars, as well as individual and group pro¡ects focusmg on Latln /\monean and CanbbeAn realllles Faeully üom the Unlva"i~¡ ot Calg•ry •nd 1.alln Amedcan universities tsacn in ll:l0 program, wh1cb 1s conducled al OLADE's heaUquarlers in Quito. Ecuador

Master's Oegree in Energy& Environment


32

Elnctricity = Mydroenergy•Geothermal+Nuclear Other = Firewood+Sugar cane products+Other primary

0%

20%

• Ottler OEll}:t<IC'iy o El N11:.11N9ai; ll Oil

60%

PRIMARY SUPPLY STRUCTURE (%)

GROWTH OF PRIMARY

12 ENERGY SUPPLY(%)

10 . 8 - -~41!111<Jl91t

6

~

= 4 lfl ~Elt:tl11t1I'(

-º°"' 2 -<>- 1()1,,1

o

sou-ce: OLADE-EC. Energy-Economlc lnformation System (SIEE)

' 1970 1980 1990 1996 Mix

(%) 1996 Oil 1446316 1812526 1949841 2063768 48.8% ---- >-- -- - - . -- Natural gas 233349 456089 648132 851796 20.1% _._ Coal 64761 104817 153813 192828 4.6%

Hydroonergy 55716 143733 256618 355523 8.4% Geothermal o 3427 12190 13258 0.3% Nuclear o 3920 14185 23094 0.5°k

Primary electricity 55716 151080 282993 391875 9.3% Firewood 408557 425717 440417 404921 9.6% - Sugar cana producl! 87623 134738 213175 259282 6.1% Other primary 10279 16019 54099 6797~ 1.6% - Other 506459 576474 707691 732181 17.3%

>-- TOTAL 2306601 3100986 3742470 4232448 100.0% -

LATIN AMERICAAND THE CARIBBEAN EVOLUTION OF PRIMARY ENERGY SUPPLY

(10(3) BOE)

Sta lis tics


33

1970

1980

47,7 1990

1996

RESERVES-PRODUCTION RATIO

[-PROOUCTION _, IMf>ORTS

o

1000000

2000000

1 140000000 120000000 100000000

ªººººººº 60000000 -oocoono 20000000 o

4000000

EVOLUTION OF OIL [10(3)Bbls)

SOURCE: OLADE·EC, Energy-Economic lnformation System (SIEE)

1970 1980 1990 1996 PRODUCTION 1919122 2064304 2527212 3126444 ,_ -~ - IMPORTS 382310 531908 368056 413757 ,_ EXPORTS 936781 876946 1020584 1606012 RESERVES 24688700 74181900 120501500 129413800

LATIN AMERICAAND THE CARIBBEAN EVOLUTION OF OIL

(10(3) Bbls]

Latín Arnencun Energ~· Org(lni~ation • OIAOE


oOthcr o o lnd,istnal .11 ~

_J

:,in~ust:-1 c::::i c::::i ornors -<> TOTAL

-

34

Other: Agri, Fishing, Mining+Construct.Olh. +Nonenergy

40%

60%

80%

100% STRUCTURE OF FINAL ENERGY CONSUMPTION (%)

o

7

6 5 4

3 2

GROWTH OF FINAL ENERGY CONSUMPTION (%)

Statistics

LATIN AMERICAAND THE CARIBBEAN EVOLUTION OF FINAL ENERGY CONSUMPTION

[10(3) BOE] 1970 1980 1990 1996 Structure

í ----~~- (%} 1996 - ITRANSPORTATION 335132 634654 766432 964165 31.6%

INDUSTRIAL 417942 698480 850550 1020860 33.4% RESIDENTIAL 415193 489390 545822 620946 20.3% COMMERC., SERV, PUS. 18348 41395 77960 95575 3.1% -----+ AGRI, FISHING, MINING 76939 111550 104401+---1-"3C..,73~5~1 4.5% CONSTRUCTION OTHER 4200 8663 12185 11713 0.4% ENERGY CONSUMPTION 1267754 19S4132 2357350 285061 O 93.4% NONENERGY CONSUMPT. 45544 119956 172570 202310 6.6%

---"-' FINAL CONSUMPTION 1313298 2104088 2529920• 3052920 100.0~ Source: OLADE-EC, Energy-Economic lnformation System (SIEE) -----


35

Other: Gasoline+Kerosene+Diesel Oil+Fuel Oil+Coal

1996 1990 1980 1970

STRUCTURE OF RESIDENTIAL CONSUMPTION (%)

70-96

c::=:J c::=:llPG -Ot11~r ~TOTAL

i=JN,')11•! 11 S)i'I~ • íl r-«

-G101119as

10.0

s.o M ~.o 2.0 o.o

·2.0 70-80

·4.0

·6.0

GROWTH OF RESIDENTIAL CONSUMPTION (%)

(%) 1996 Natural gas - 4348 5800 6421 10774 1.7% Goal 1880 1283 1.0~~ -- 1107_ '- 0.2% Firewood - 287912 276412 256020 243892 39:3% Other primary 1701 1787 2768 2871 0.5% Electricit}'. 23129 53927 86738 122647 19.8%

_Liquefied gas 34519 68819 116902 15615~ 25.1% Gasoline/alcohol 1324 2399 2403 1383 0.2% Kerosene & jet tuel 35206 34510 22652 19814 3.2% Diesel oil 1972 4600 1642 2761 0.4o/~- Fuel oil 606~ 8979 5876 7616 1.2% Charcoal 8935 11682 9616 9716_ 1.6%

,~es 8198 19192 33712 42197 6.8% TOTAL 415193 489390 . ...._ 545822 620936 100.0%

Source: OLADE-EC, Energy-Economic lnformation System (SIEE) .

Estructura 1996 1990 1980 1970

LATIN AMERICAAND THE CARIBBEAN EVOLUTION OF RESIDENTIAL CONSUMPTION

[10(3) BOE]

Lañn Americen E.ncr9y Organiz.ation • OlADE


36

• • ••••••••••••••••••••••••••••••••••••••••••••••••••••• •

'l'ho sirategic merger oí both companies includcs plans to extend their business throughout MERCOSUR, espectatlv the irnportant market of Sao Pmdo, 13rJzil.

Sol Petróleo h<•S becn operating in Argentina since ·192r,, it has ·1,soo shareholders, and it is estirnatcd rhat by the ve,ir 2001 it will have 400 scrvicc station íacilities.

111 order lo complv with tho agrcorncnt. the Uruguavan companv will havo to retroñt lts rcfincry ovcr a 36-month pcriod. (or an ínvostmont oí between US$HO mil lion and US$ ·1 00 mil lion, airncd ilt upgradiog the µ1<1111 with state-of-tbc- <irt tcchnologv for producing unleaded fucl.

The frarnework aweement provídos rhat ANC/\P wil 1 be sel linr, íuel for i1 1 :;. veur pcriod. M oí J11ly 200·1, al which time it will have to ~ur¡)ly Argentina 35,000 cl1hic rncicrs oí fuel per month, whereas borwccn 200(, and 2015 thc volumc will amount to 64,000 cubre mctors por month,

The Mi11bter oí lndustry, Fncrgy, and Mining oí Uruguay, 1 )r. Julio Herrera, statcd 1h,)t this agrcomont provided sound proof oí tho progross nchicved by integration offons in the countries oí MERCüSUI<, which has been possible rhanks to the poi ili<.:<11 dec is ion of tho lcadors of both <.:ou111ries and th<' opportuuities oííercd hy thc legal reforrns oí rhc Uruguavan cnorgv sector.

This is rhe case oí the rcccm agreement sígocd on [une ·1 O, 1998 whereby the Uruguayan statc oil cornpany, /\NCAP, acquired a 33% share oí the stock oí the Argcnünean privare-sector companv Sol Petróleo, which would cnable 1\NC1\P to be part oí a network oí 1 70 service sratlons in the Creater Mctropolitan /\re<i oí rhc Captrnl of Hucnos Aires and would imply sales íor rhc Uruguayan State oí bcrwcon US$.l 50 million and US$200 mi Ilion pcr vear, converting ANC:AP into the principal export company oí Uruguay.

In addition, ihc rransformations iaking place in rho cncrgv sector oí Latin America and the Caribbean have f<1cilitated various tvpcs oí alliances and invcstment airned at cnsuring efficiency and development.

Energy is bccoming a deterrnining factor in regional and subrcgional integration proccsscs.

MERCOSUR: Pubiic and prívate sector integrntlon

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• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

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