Lima,  July 14, 2005

The CAN has an important role to play in the energy field, above all considering that the Andean region is responsible for all of South America’s exportable oil surplus; that the rest of South America is a net oil importer; that the Andean region produces and consumes approximately one-half of South America’s gas; and that we are net gas exporters to the rest of South America.  Just as coal and steel were the cornerstone of Europe’s integration process and are vital to its economic development, energy is called upon to play a similar role for Andean integration and for the building of the new South American Community of Nations.

The Andean Community countries have been taking steady steps in that direction through the interconnection of electricity and natural gas, as basic elements of the Andean Energy Alliance (AEA) agreed upon at the First Meeting of the Council of Andean Community Ministers of Energy, Electricity, Hydrocarbons and Mines, held in Quito on January 30, 2004. 

The benefits derived from the application of Decision 536 are noteworthy, particularly the electrical interconnection of Colombia and Ecuador, which even foresees a third link between the two countries.  Also to be stressed are the advances made toward the electrical interconnection of Peru and Ecuador, whose link was completed in late 2004.  Bolivia’s decision to adhere to that Decision is also important in this regard. 

The Group of Gas Experts at their Second Meeting agreed that a consensual proposal of the General Framework of Community Legislation that would facilitate natural gas interconnection within the Andean Community is something we need.  Attention was also drawn to the current status of negotiations on the execution of the project to interconnect Colombia (Ballenas) and Venezuela’s Paranguaná Refinery, as well as on the possible supply of natural gas through triangulation with Ecuador. 

Important findings have emerged over the past year from studies conducted with the collaboration of multilateral organizations like the Andean Development Corporation and the Inter-American Development Bank, to look into the potential contribution of the hydrocarbons sector to Andean Community Development and to identify the energy clusters (Industrial conglomerates dedicated to oil drilling and production) that could be developed in the Andean region. 

We hail Venezuela’s initiative of creating PETROANDINA as a mechanism for cooperation among Andean oil and gas companies.  This institution will doubtlessly contribute to energy security, economic and social development, and the reinforcement of the integration of Andean Community Member Country energy systems. 

The Andean Community is also promoting the development of renewable energy sources.  An ECLAC report is available today under the Andean Program for Energization through Renewable Energy Sources in rural areas, as a fundamental instrument within the organization to fight poverty and strengthen social cohesion. 

The CAN is likewise aware of the contribution made by fossil fuels to the greenhouse effect, which has a harmful global impact on the earth’s climate and water resources.  We now have the opportunity and the responsibility to participate actively by taking a coordinated stand, through ECLAC, in the United Nations Commission on Sustainable Development, in keeping with the Kyoto protocol commitments.  

The CAN’s priority, in building a long-term joint strategic vision of our integration process and energy development, is to launch a comprehensive twenty-year forecasting project.  To that end, a working program has been arranged with the United Nations Department of Economic and Social Affairs, UNCTAD, and the IDB,  in which we hope other international organizations and institutions will join. 

That is the great challenge the Andean Community faces in guiding and deepening its development and integration and may well turn out to be its great contribution to the building of the South American Community of Nations.