MARIANNA PÁRRAGA
EL UNIVERSAL

A number of analysts attending the South American Energy Summit in the Island of Margarita, eastern Venezuela, where eight Heads of State met, believe Venezuela is virtually unlikely to stop the momentum ethanol development has gathered in the region.

However, the Venezuelan delegation threw the dices and put a bet on a moderate growth of ethanol -a combustible alcohol the industrial manufacture of which requires sowing million hectares of sugar cane or corn, thus using fertile lands many countries need to ensure food security.

As part of the so-called South American Energy Treaty President Hugo Chávez presented before his counterparts in the summit, a research was conducted on the ethanol needs Venezuela may have, not only domestically but also abroad, in the neighbor countries where Caracas is undertaking joint investments in the areas of oil refining and petrochemicals.
 
Based on this survey, in order to mix ethanol with the 1.57 million bpd of gasoline state oil giant Pdvsa plans to produce in seven foreign countries, 157,000 bpd of ethanol are required. Therefore, 1.38 million hectares of corn or sugar cane need to be sown.

This calculation assumes that ethanol will be mixed with gasoline in a proportion of 10 percent. While for many nations this proportion means a significant and sufficient amount, it pales in comparison to Brazil's intent to multiply ethanol production. Brazil is currently producing 400,000 bpd of ethanol, which is added to gasoline in a proportion of 25 percent. Besides, Brazil has started manufacturing cars using 100 percent ethanol.

Reduced borders
Following divergences over biofuels -even before the summit- Bolivian President Evo Morales, with some objections, initialed the Declaration of Margarita. In the document, the references to biofuels were toned down. Additionally, President Chávez publicly offered to remove import tariffs from Brazilian ethanol shipments to Venezuela, and even vowed to start joint ethanol production projects in Ecuador, for instance.

Since lead tetraethyl substitution in the Venezuelan domestic market, Pdvsa in mid-2005 entered into a supply agreement with the Brazilian Government to import ethanol and start tests for use of this biofuel nationwide. However, high corrosion levels caused by ethanol in tanks and lines with low water content have prevented the use of ethanol from spreading.

Since mid-2005, Venezuela has imported small amounts of ethanol -less than 30,000 bpd - from Brazil. But according to Chávez' statements, the accord will not be terminated. On April 16, the Venezuelan ruler asked his Brazilian counterpart Luiz Inácio Lula da Silva to renew this agreement for a minimum of two years. During this term, progress should be made in the construction of the 11 ethanol manufacturing plants to be built jointly with Cuba.

Venezuela also seized the opportunity to ask for Brazilian mediation before Washington for the United States to remove import tariffs on ethanol, as Pdvsa's refining branch in the US Citgo's imports of ethanol are increasingly expensive.

Therefore, following Brazil-US alliance on biofuels, Venezuela's stance on this issue translates into limited ethanol production, provided use of raw materials do not endanger food production.

"We have coined a term: the strictly necessary ethanol," said Chávez. He added that "the United States holds five percent of the world population, but its energy consumption is 20 percent of global energy production and has small reserves. In 50 years, they have virtually depleted what they had. (US President George W.) is even talking about using wood (to produce fuels). Fortunately this little gentleman has little time left; otherwise, he would raze everything."

According to Venezuelan Minister of Energy and Petroleum, 10 percent is the maximum proportion of ethanol Venezuela is willing to develop.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com