Peter Howard Wertheim
OGJ Correspondent
RIO DE JANEIRO, Feb. 22 -- Venezuelan President Hugo Chávez and Brazilian President Luiz Inacio Lula da Silva agreed Feb. 21 to create a "strategic alliance" between the two countries.
The 20 accords include cooperation in such areas as oil and gas production, refining, petrochemicals, energy, mining, agrarian reform, fishing, science, technology, communications, avoidance of double taxation, and the sales of Brazilian jet fighters to Venezuela.
Brazilian-Venezuelan trade increased to $1.6 billion in 2004 from $880 million in 2003 and is expected to rise to $3 billion in 2005.
Cuban approaches
José Eduardo Dutra, president of Brazil's state-run Petroleo Brasileiro SA (Petrobras), said, "One of the agreements includes the construction of a lubricants factory in Cuba through a joint venture between Petrobras, Petroleos de Venezuela (PDVSA), and Cuba's state-owned oil company Cupet [Cubapetroleo SA].
"The factory would require investments of $20 million and would produce lubricants in Havana for domestic consumption and for exporting to neighboring Caribbean countries."
With changes to Cuban requirements that Cuba hold at least 50% of any partnership forged with international companies—Petrobras and PDVSA want a one-third stake each to build the plant—Dutra believes the deal is viable.
Brazilian analysts view this project as more than just the relatively small investment in a lubricants factory. It represents both presidents' continuing efforts to remove Cuba from political isolation created by the decades-old US embargo.
Petrobras also is evaluating oil exploration and production in the deepwater Cuban sector of the Gulf of Mexico.
Energy accords
Chávez said, "Today we have reached the point of no return in the path towards integration. We have the continent's largest oil and gas reserves."
He added that Venezuela would rather strike deals with other South American countries than with the US.
The Brazilian president said, "Solutions to South America's problems are within our continent and not in the north or overseas."
The alliance involves E&P cooperation between PDVSA and Petrobras for projects in Venezuela and the creation of a regional financing system within the framework of Brazil's National Economic Development and Social Bank. BNDES Pres. Guido Mantega has committed the bank to financing contracts of as much as $235 million for infrastructure projects in Venezuela.
After 3 years of negotiation, Petrobras and PDVSA have agreed to jointly build a 150,000-250,000 b/d refinery in the northeastern Brazilian state of Pernambuco (OGJ Online, Feb. 7, 2005). PDVSA selected Brazilian executive Gilberto Prado, who conducted the negotiations, as a minority partner in the project, said PDVSA sources in Rio de Janeiro.
Construction on the $2.5-3 billion project should begin in 6-8 months (OGJ Online, Feb.7, 2005).
Brazil's giant private petrochemical group Braskem also will include Venezuela in its international expansion strategy, a Braskem source told OGJ. The company signed a memorandum of understanding with PDVSA's petrochemical arm Pequiven to evaluate possible new business.
