COMPARATIVE STUDIES, 20002005 COMPARATIVE RESOURCE Management in Latin America Humberto Campodónico Resource Management in Latin America Comparative Studies, 2000 to 2005 Humberto Campodónico Copyright © 2009 by Revenue Watch Institute. All rights reserved. PLEASE NOTE: The two parts of this publication were originally published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) in March/April 2007 as two separate volumes: Humberto Campodónico, “Gestión mixta y privada en la industria de hidrocarburos”, Recursos naturales e infraestructura series, Nº 122 (LC/L.2711-P/E), Santiago, Chile, Economic Commission for Latin America and the Caribbean (ECLAC), April 2007. United Nations publication, Sales No. S.07.II.G.59. Humberto Campodónico, “La gestión de la industria de hidrocarburos con predominio de empresas del Estado”, Recursos naturales e infraestructura series, Nº 121 (LC/L.2688-P/E), Santiago, Chile, Economic Commission for Latin America and the Caribbean (ECLAC), March 2007. United Nations publication, Sales No. S.07.II.G.39. The views expressed in this publication, which was distributed in its Spanish version without formal editing, are those of the authors and do not necessarily reflect the views of ECLAC. To learn more about ECLAC, please go to www.eclac.org. This English version is published by the Revenue Watch Institute, which assumes all responsibility for any errors in translation or formatting. ISBN: 978-0-9823566-0-9 Revenue Watch Institute 400 West 59th Street New York, NY 10019 USA Tel: +1 212 548 0600 www.revenuewatch.org Design and layout by Judit Kovács | Createch Ltd. Printed in the United States of America Contents Summary ......................................................................................................................................................... 5 Introduction ......................................................................................................................................................... 7 PART ONE Public Management in the Hydrocarbon Industry .............................................................................................. 9 Introduction ................................................................................................................................................ 11 List of Boxes, Figures, and Tables .............................................................................................................. 13 I. Overview and Findings ......................................................................................................................... 15 A. Legal Modifications During the Current Decade ........................................................................... 15 B. Management Style .......................................................................................................................... 16 C. Company Auditing .......................................................................................................................... 17 D. Decision-Making over Investment ................................................................................................. 18 E. Investment Behavior ....................................................................................................................... 18 F. Reserves and Production Indicators .............................................................................................. 20 G. Relation with Foreign Investment .................................................................................................. 20 H. Energy Internationalization and Integration .................................................................................. 21 II. Industry Management in Brazil ............................................................................................................ 23 A. Legal and Regulatory Framework ................................................................................................... 23 B. Management Style .......................................................................................................................... 24 C. PETROBRAS’s Corporate Strategy ................................................................................................. 26 D. Investment ...................................................................................................................................... 27 E. Oil Revenues ................................................................................................................................... 28 F. Oil Opening in Brazil ...................................................................................................................... 29 G. Internationalization ......................................................................................................................... 31 III. Industry Management in Chile ............................................................................................................. 37 A. Legal and Regulatory Framework ................................................................................................... 37 B. Management Style .......................................................................................................................... 38 www.revenuewatch.org l 3 l C. Investment ...................................................................................................................................... 39 D. State Oil Company Activities .......................................................................................................... 40 E. Oil Contracts and ENAP’s Internationalization ............................................................................. 43 F. Liquefied Natural Gas Project ........................................................................................................ 48 IV. Industry Management in Mexico ......................................................................................................... 49 A. Legal and Regulatory Framework ................................................................................................... 49 B. Management Style .......................................................................................................................... 50 C. Investment and Funding Sources .................................................................................................. 53 D. International Production and Trade ............................................................................................... 55 E. Taxation Regime ............................................................................................................................. 56 F. Finance ............................................................................................................................................ 58 G. Internationalization ......................................................................................................................... 58 V. Industry Management in Venezuela .................................................................................................... 59 A. Legal and Regulatory Framework ................................................................................................... 59 B. Management Style .......................................................................................................................... 61 C. PDVSA’s Social Approach ............................................................................................................... 64 D. PDVSA’s Investment and Financial Aspects .................................................................................. 67 E. Foreign Direct Investment .............................................................................................................. 69 F. Production ....................................................................................................................................... 71 G. Internationalization and Regional Integration ............................................................................... 74 Endnotes ..................................................................................................................................................... 81 PART TWO Mixed and Private Management in the Hydrocarbon Industry .......................................................................... 85 Introduction ................................................................................................................................................ 87 List of Boxes, Figures, and Tables .............................................................................................................. 89 I. Comparative Analysis of Predominantly Public Mixed Management ................................................. 93 A. Industry Management in Colombia ............................................................................................... 97 B. Industry Management in Ecuador .................................................................................................. 107 II. Private Management in the Hydrocarbon Industry ............................................................................. 123 A. Industry Management in Argentina ............................................................................................... 128 B. Industry Management in Bolivia ...................................................................................................