(May 18, 2006) Petróleos de Venezuela (PDVSA), Venezuela’s state oil company plans to open new offices in Chile in 2006. The oil company would like to supply Chile with crude oil and natural gas as well as use Chile as a regional base to distribute diesel.

The announcement follows on the heels of Argentina’s statement that they will not be able to continue supplying Chile with the natural gas it needs to generate electricity. The possibility of reaching an agreement with PDVSA would help solve many Chile’s mid and long-term energy problems.

PDVSA is the fourth largest oil producer in the world. In 2005 the company grossed US$85.6 billion and recorded net profits of US$4.7 billion. Venezuela’s President Hugo Chavez has used his country’s wealth to promote his political agenda in Latin America. His plan uses “petro-diplomacy” to provide Latin American countries with low-cost oil, attempting to shift the region’s traditional balance of power away from the United States.

Examples of this petro-diplomacy include preferential loans to poor countries like Haiti that was granted a 20-year loan at 1 percent interest for the sale of Venezuelan oil. President Chavez also subsidizes oil sales to Cuba and offered several low-income neighborhoods in Massachusetts and New York a 40 percent discount on oil last year.

President Chavez is also trying to gather support for the construction of an 8,000 km gas duct that would supply South American companies with natural gas from Venezuela. The project is estimated to require investments of at least US$10 billion.

Venezuela currently possesses the largest petroleum and gas reserves in South America, nearly tripling Bolivia’s proven natural gas reserves. The company estimates that it will be able to produce 5,847,000 barrels of crude oil daily by 2012.

SOURCE: EL MERCURIO