Weekly Report - 10 February 2004

BOLIVIA | Interest in Atlantic outlet. There appears to be real interest in Brazil in providing an oceanic outlet for Bolivia's natural gas. Petrobrás and BG are reportedly to conduct a feasibility study on a scheme to set up a gas liquefaction plant at the port of Sepetiba, in Rio de Janeiro, with a capacity of 15m cubic metres a day. What makes this idea attractive is that it might take up the slack in Brazilian demand for the gas pumped along the duct from Bolivia, currently being used at about half its capacity. The most visible adverse factor is the high cost of transport, particularly on the Brazilian side.

Another piece of good news for Bolivia is that Argentina's President Néstor Kirchner has announced that his country will increase its purchases of Bolivian natural gas. Mindful of Bolivian political sensitivities, Kirchner has promised it won't be resold to Chile (though it would most likely make up for the gas from Argentine deposits that are sold to Chile).

COLOMBIA | Uribe wants faster growth. President Alvaro Uribe took to the air to urge his own economic team to achieve a GDP growth rate of 5%. He noted that last year, when the government had projected only 2% growth, the actual rate was 3.5%. The President noted that the head of the planning department, Santiago Montenegro, had proposed for this year a target rate of 3.8%, but added, `The truth is that this country needs to grow more than that. We must make the effort [...] It is difficult but not utopian to think of 5%.' His main difficulty will be convincing the central bank.

ECUADOR | Alarm on the energy front. The government has declared a `preventive' state of emergency in the energy sector, to last until March, to prepare for the prospect of the annual decline of water levels at the Paute hydro complex, which provides 65% of Ecuador's electricity. This means redirecting all available funds to build up thermal power generation. On this front, the problem is that Petroecuador's oil output has fallen to 191,000 barrels per day, the lowest level in a decade — just as export prices have risen to US$30.3 per barrel, the highest since Petroecuador's creation in 1989 and 15% higher than last year's record average of US$26.2 per barrel.