Venezuela, Colombia Sign Energy Agreements, Vowing to Revive Lost Trade

[Judi Lynn]

Venezuela, Colombia Sign Energy Agreements, Vowing to Revive Lost Trade
By Jose Orozco - Nov 3, 2010 12:42 AM CT

Venezuelan President Hugo Chavez and Colombian President Juan Manuel Santos signed agreements in Caracas on energy projects and vowed to revive bilateral trade hurt in part by a border dispute.

“The world should know that Chavez and Santos are committed to not allowing anyone derail us, independent of political differences,” Chavez said last night on state television. Santos said the two leaders will meet every three months to improve ties and discuss joint projects.

Petroleos de Venezuela SA will restart gasoline shipments to Colombian border areas and work with Colombia’s Ecopetrol SA to pump oil from mature wells, according to the accords. The companies may also create a venture to produce heavy crude oil from the Orinoco Belt. The two leaders agreed to study a plan to extend a gas pipeline into Central America and another to build an oil pipeline from Venezuela to Colombia’s Pacific coast.

The moves came after Chavez visited Santos in August to restore diplomatic ties following a dispute over Colombian accusations that Venezuela was harboring Marxist rebels. Chavez in July put troops on high alert along the 1,375-mile (2,200- kilometer) border between the two countries.

More:
http://www.bloomberg.com/news/2010-11-03/venezuela-colombia-sign-energy-agreements-vowing-to-revive-lost-trade.html

[social_critic]

1. I guess they'll be shipping Colombian gas to Panama?

A pipeline is already in place to ship oil across Panama, and the Colombians don't ship oil to China, they won't invest in a pipeline when one is already there to be used.

I think Santos reminded Chavez that Venezuela does import gas from Venezuela, so it would be a good idea for Venezuela to ship some gasoline to Colombia.

[Commie Pinko Dirtbag]

2. Is it just me or is the new Colombian President considerably less rabid than the previous one?

I don't see Uribe doing that for any Hell temperatures greater than 30.

[social_critic]

3. They're pretty much the same

Santos was Uribe's defense minister. The difference is the state of the Venezuelan economy...it is suffering. Venezuelan provinces near the border with Colombia have done business with Colombia for a long time, as the Venezuelan economy melts down, and the Venezuelan embargo against Colombia continues, the Venezuelans living in these border areas are increasingly unhappy with Caracas. Venezuela's ruler, Chavez, realizes his popularity has gone down considerably (for example during recent election results the majority voted against his party). The economy continues to go down, inflation continues to rage, and they seem to believe nationalizing companies and property piecemeal is going to scare the opposition, but this doesn't seem to be working - and it is also causing more economic malaise.

So Chavez has to plug the holes somewhere, and this move to open up a bit with Colombia is one move he may be making to reduce tension. Also, there's the little announcement made recently by the Colombians, that "due to maintenance" they will cut off gas sales to Venezuela for a while. Western Venezuela relies on Colombian gas, and this gas will have to be replaced by burning fuel oil, which means Venezuelan exports are cut back. And this hurts Chavez' pockets at a time when he really needs the cash to throw around to buy support. His regime relies on clientelism and a corrupt kleptocracy siphoning the money from oil exports to stay alive. Which means they got to have the natural gas from Colombia to prop themselves up. This is a race against time, they will sell bonds, mortgage oil production to China, do whatever they got to do to get to the elections in 2012, and see if Chavez can manage to pull enough vote to call it a win. So in a sense Santos has somewhat of a choke hold on whatever happens in Western Venezuela. I also suspect we won't see many FARC guerrillas taking refuge in Venezuela for a while.