Energy Oil, Gas and Beyond
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FALL 2015 HARVARD REVIEW OF LATIN AMERICA ENERGY OIL, GAS AND BEYOND ENERGY EDITOR’S LETTER BY JUNE CAROLYN ERLICK Zocalo Hed 26 pt Zocalo deck 14 point one line BY HARVARD REVIEW OF LATIN AMERICA FALL 2015 VOLUME XV NO. 1 Oil, Gas and Beyond Published by the David Rockefeller Center for Latin American Studies I was waiting for the ship to come in. In fact, so was everyone else in Nicaragua. Gas lines VOLUME XV NO. 1 Harvard University stretched around the block. The supermarket shelves were nearly bare. Lights went out again David Rockefeller Center for Latin American Studies and again, plunging the country into frequent darkness. Telex machines couldn’t work, and we reporters had to depend on the few places with generators to file our stories (for younger Director Brian Farrell readers, this was pre-computer and smart phones). U.S. President Ronald Reagan had imposed a trade blockade on Nicaragua in May 1985. The Soviets were sending oil, dodging Executive Director ENERGY Ned Strong the blockade. ReVista OIL, GAS AND BEYOND We reporters did what we always do: we reported on the ship’s arrival. But we also Editor-in-Chief breathed a collective sigh of relief. The arrival of the Soviet ship meant hot showers and light June Carolyn Erlick to read by. Copy Editor Energy is intensely political. It shapes nations and trade and fuels wars and blockades. FIRST TAKE Anita Safran Energy, I discovered then, is also intensely personal. It shapes our lives on a daily basis. It’s not Latin America’s Oil and Gas by Francisco J. Monaldi 2 Publication Interns only a matter of how we get around or whether we have enough food to eat; energy produc- Isabel Espinosa tion affects the communities that receive it and those that produce it. It shapes attitudes Gabriela Farrell THE POLITICS OF OIL IN EVERY ISSUE toward gender and race and nationalism and identity. It pollutes the air and the rivers. It offers Diego Lasarte Brazil’s Oil Scandal by Simon Romero 8 immense economic opportunities. Or it does both. Design Energy and Politics in Brazil by Lisa Viscidi 13 You might not think of Latin America and the Caribbean right away as a big energy Jane Simon Design Mexico’s Energy Reform by Myrna Santiago 16 BOOK TALK producer or consumer. But Venezuela stands ninth in global oil production with gas reserves Printer China in Latin America by Rebecca Ray 20 Transforming U.S.-Latin American Relations almost triple those of Canada. Three countries—Venezuela, Brazil, and Mexico—account for P+R Publications by Michael Shifter 78 about 90 percent of the region’s oil production. And Latin America and the Caribbean also Contact Us THE ECONOMICS OF ENERGY Human Rights, Human Woes have the capability to provide abundant alternative and renewable energy sources: wind, solar, 1730 Cambridge Street What Powers Latin America by Ramón Espinasa and Carlos G. Sucre 24 by Daniel Gonzalez 80 geothermal and biomass, among others. Cambridge, MA 02138 The Impact of Falling Gas Prices by Luisa Palacios 28 Musical Creation and Hardship Perhaps because of my experience in Nicaragua, I started to conceive this issue in terms of Telephone: 617-495-5428 Peruvian Oil Production by Eleodoro Mayorga Alba 32 by Pedro Reina-Pérez 82 meta-politics. And there is certainly a lot of politics related to energy in the region: the politi- Subscriptions, Back Copies and Comments cal upheaval of Brazil as a result of corruption scandals in the national oil company; the turmoil [email protected] ALTERNATIVE ENERGY BUILDING BRIDGES in oil-rich Venezuela; the impact of the semi-privatization of Mexico’s oil industry; the targeting Website Wind Energy in Latin America by Carlos Rufín 36 Building Bridges with Cuban Libraries of Colombia’s energy installations by guerrilla forces in a show of strength in the context of the revista.drclas.harvard.edu The Power of the Brazilian Wind by Mauricio B. C. Salles 38 by Lynn M. Shirey 84 ongoing peace process. Facebook Solar Energy in Chile by Claudio A. Agostini But then I thought back on how the arrival of oil had been experienced on a very local and ReVista, the Harvard Review of Latin America Carlos Silva and Shahriyar Nasirov 40 personal level. I began to hear stories about the production of energy: what it felt like to grow Copyright © 2015 by the President and Geothermal Energy in Central America by Jacques E. C. Hymans 42 ONLINE up in an oil camp, how energy production affects indigenous women in one particular region, Fellows of Harvard College. Look for more content online at ISSN 1541—1443 how local communities involve themselves in deciding what is done with oil. LIVING WITH OIL revista.drclas.harvard.edu ReVista is printed on recycled stock. And just recently Alvaro Jiménez, Nieman Affiliate at Harvard ‘09, happened to mention to Life in a Venezuelan Oil Camp by Miguel Tinker Salas 46 me that he was starting a website “Crudo Transparente,” a site that monitors the Colombian Behind the Corporate Veil by Kody Jackson 50 oil industry. Out of curiosity—and as a quick break from proofreading this issue—I took a peek. Añelo and Vaca Muerta by Mariana Barrera 52 The site focuses on five areas: local economy, contracts and royalties, environment, security This issue of ReVista is made possible and human rights and ethnic conflicts. I was pleased to see how much overlap there was with through generous support of FOCUS ON THE AMAZONS ON THE COVER the themes I had chosen for this issue of ReVista. Santander Universities Global Division. Beyond Dinosaurs and Oil Spills by Theodore Macdonald 56 Petrobras Oil Platform Although the website deals with only one country—Colombia—it felt like an affirmation Forests for Energy? by Juan Luis Dammert B. 62 Photo By Ricardo Stuckert/PR of the focus I had chosen for this wide-ranging topic. Energy is political. Energy is personal. Oil and Indigenous Communities by Barbara Fraser 66 (Agência Brasil [1]) [CC BY 3.0 Energy matters. In the Shadows of the Extractive Industry by Nelly Luna Amancio 70 br (http://creativecommons. org/licenses/by/3.0/br/deed. PREVIOUS REVISTA ARTICLES ON ENERGY 7 7 en)], via Wikimedia Commons 2 ReVista FALL 2015 REVISTA.DRCLAS.HARVARD.EDU ReVista 1 FIRST TAKE 1 2 Latin America’s Oil and Gas After the Boom, a New Liberalization Cycle? BY FRANCISCO MONALDI MEXICO HAS RECENTLY OPENED UP ITS OIL IN- foreign investment in oil and gas—Ven- two years after completion of the nation- dustry, which had been under exclu- ezuela, Bolivia, Ecuador and Argentina— alization process, initiated in 2005. sive state control for the past 75 years, decided to nationalize their resources in During the last five years, PDVSA, the to private investment: a move that will this period; Mexico, until recently the Venezuelan national oil company, has very likely reconfigure the Latin Ameri- largest oil producer in the region, main- signed seven major extra-heavy oil joint- can oil industry in the decades to come. tained the oil industry as a state monop- ventures projects with foreign partners, Other Latin American governments of all oly until 2013. including Chevron, CNPC, ENI, Rep- political tendencies are now enthusiasti- As recently as 2012, the Argentine sol, and Rosneft. These projects would cally courting foreign investment in oil. government re-nationalized YPF, the require more than US$100 billion in This all would seem to proclaim a new formerly privatized national oil com- investment. When completed, they could liberalization cycle in the industry. Al- pany, culminating a decade of eroding yield more than 1.5 million barrels a day though this trend started before the oil conditions for oil investors in the region. in production. PDVSA also pursued other price collapse, it has been strengthened There were some exceptions. Brazil and smaller partnerships with foreign com- by plunging prices. However, if history Colombia, for instance, did not follow panies in conventional oil production, is any guide, resource nationalism is un- the same expropriation pattern. Still, and a major offshore natural gas project likely to go away. Latin America was the leading example with Repsol and ENI. In fact, despite the To understand this phenomenon, let’s of a global phenomenon of increased radical leftist discourse of the Venezuelan take a look at history. The first decade of state intervention and nationalization. government, it has been actively courting this century witnessed one of the largest resource windfalls for commodity export- ers. Latin American countries benefited tremendously from the large and persis- Undoubtedly, the most important new development in tent increase in commodity prices. The the region’s oil industry is the opening of the Mexican 3 4 price of oil rose from a low of $10 in 1998 to more than $100 per barrel ten years hydrocarbon sector to foreign investment. later, generating a revenue boom for the 1 2 3 4 regions’ net exporters of hydrocarbons: Outside the region, Russia was the most foreign investors. In the last two years, 46°37’38.01”S | 38°10’9.89”S | 68°7’40.52”O 22° 9’54.06”S | 45°47’13.47”S | 68° Venezuela, Mexico, Ecuador, Colombia, notable example, but many others could the trend to liberalize the sector is unmis- 67°55’35.03”O | 9 Mar 2009 | 28 Sep 2006 | Printed on 63°36’29.45”O | 1 Sep 2011 | 3’45.55”O | 30 dic 2005 | Bolivia, and even Argentina, a declining be found throughout the world. The gov- takable, with the government offering all The| Printed map shows on Cason the four-country regionCanson and the River Plate basin (in blue) withinPrinted which on theCanson Guarani Territory extends.Printed The on red Canson areas mark the Baryta | Print max size: Baryta | Print max size: Baryta | Print max size: Baryta | Print max size: net exporter on the way to become a net ernmental share of profits increased in sorts of sweeteners to make investment location of the thirty Jesuit Missions.