Peru in focus; Pisco in asia, GDP, Cooperation with Ecuador

Andina News reported a few blog worthy news bites on Peru today. Visit their site to browse more stories, including the complete version of the excerpts posted below.

Peru prepares pisco promotional campaign in Asia

Lima, Jul. 12 (ANDINA). In a bid to boost pisco exports, Peru will launch a promotional campaign for increasing consumption of its national drink in the Asian continent.

“Pisco has enormous potential in the Asian market but we still have a lot to do. Commercial offices in the region are making progress and we must design an aggressive campaign,” said the director of the Commercial Office of Peru in Taipei, Gycs Gordon.

Peru’s GDP likely to post two-digit growth rate in second quarter

Lima, Jul. 12 (ANDINA). Peru’s Gross Domestic Product (GDP) growth rate would have registered a two-digit increase in the second quarter this year, Peru’s Minister of Economy and Finances Mercedes Araoz said Monday.

Peru, Ecuador discuss tourism cooperation

Lima, Jul. 12 (ANDINA). Peruvian Trade and Tourism Minister Martin Perez will meet Monday with Ecuador’s Tourism Minister Freddy Ehlers to address issues relating to tourism facilitation, investment, community-based tourism and handicrafts, among others.

China to create $5 billion fund to invest in Latin America

In line with China’s outbound investment strategies in Africa and Asia, China is now planning to create a $5 billion usd investment fund for Latin American investments.

The funds target investments will include, infrastructure (probably to help the Chinese get commodities out), agriculture, mining and energy.

Read more in Spanish from Argentinean DERF Agencia de Noticias.

Ecuador, China to set up oil joint venture

China’s latest foray into Latin America hit the presses on Thursday when Ecuador announced it would initiate a new joint venture with the China to explore for oil in the South American country.

China’s Sinopec International Petroleum will invest $1 to $1.1 billion to form a joint venture to exploit oil from block with proven reserves of 120 million barrels of crude in eastern Ecuador.  The joint venture will between Ecuador’s state-owned Petroecuador and China’s Sinopec, according to Germanico Pinto, Ecuador’s minister of nonrenewable natural resources.

Sinopec will hold a 40 percent stake in the joint venture, with Petroecuador holding the remaining 60 percent.

Ecuador, OPEC’s smallest oil producing country, can pump out 500,000 barrels of crude each day.

“Sinopec could improve its supply chains through investing in the South American country, because in the past, the company has always concentrated on processing,” Lin Boqiang, deputy director of the China Center for Energy Economics Research at Xiamen University, said Thursday.

“The reserves of 120 million barrels of crude are small, but many countries are eager to invest and explore oil overseas,” he added. “Sinopec has the technical know-how and capital to complete the project.”

Beijing’s direct investment in Ecuador has reached $2.2 billion, making it one of the top targets of Chinese investment in Latin America, Jia Qinglin, chair of the National Committee of the Chinese People’s Political Consultative Conference, told reporters when he was paying a visit to Ecuador.

Trade between the two countries reached $2.4 billion in 2008, a 50 percent increase from the previous year, he said.

South America: An Analysis of Arms Races and Regional Geopolitics

A insightful analysis on the ongoing arms build up occurring in South America was released on Tuesday, October 20 by Council on Hemispheric Affairs (COHA). You can access the full analysis, written by research fellow Alex Sanchez if you sign up to be a (free) member of MercoPress.

Img: MercoPress

MercoPress is an independent news agency based in Montevideo, Uruguay focused on delivering news related to South America, Mercosur-member countries and covering an area of influence which includes the South Atlantic and insular territories.

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In mid-September, Secretary of State Hillary Clinton critiqued Venezuela’s leader Hugo Chavez for his ongoing purchases of mostly Russian military equipment, arguing that this could trigger an arms race in South America. The statement has added fuel to the ongoing discussions about what form South America’s rearmament is taking and what this could come to mean for the security of the region.

The aim of this paper is to discuss the major arms purchases now going on in South America and the likelihood of inter-state war breaking out as the result. Ongoing reports about major purchases by Venezuela, Brazil and Chile tend to blur the actual geo-security situation in the region, as several countries, with Argentina as the most prominent example, have carried out only limited military acquisitions. The common perception is that an arms race raises the possibility of inter-state war; however, the reality in South America (and Central America as well) is that inter-state warfare has seldom occurred since World War II. Additionally, regarding the arms race in South America, it is misleading to assume that all South American countries are carrying out their arm purchases with the same gusto as Brazil, Chile and Venezuela.

It is generally assumed that South America is either already engaged in an arms race or is about to enter one. This is somewhat inconsistent because the start of an arms race is not easily defined. It could also be argued that what is occurring is not so much a general arms race as it is a product of certain militaries capitalizing on weak civilian governments (an updated version of former Uruguayan President Bordaberry in 1973) to increase their defense budgets. Furthermore, in spite of domestic security issues in several South American countries, most notably the insurgent movements in Colombia and Peru as well as occasional inter-state tensions, the reality is that inter-state wars in the region have been notably scarce in the past few decades, which raises the question: is interstate warfare necessarily the future of South America? The final section of this article will discuss whether an arms race could lead to general warfare.

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Click here to access the full analysis from MercoPress

China's Sinohydro to build hydroelectric project in Ecuador

Ecuadorian President Rafael Correa signed a contract today with Chinese company Sinohydro Corportation.  The company will be in charge of building the Coca-Codo-Sinclair hydroelectric project along Ecuador’s Amazon river.

The project is valued at $2 billion usd and will become Ecuadors largest hydroelectric facility.  Once completed, the hydroelectric facility will be capable of meeting 75% of the country’s total power supply, reports Xinhua.

According to this Xinhua article, the Export-Import Bank of China will cover 85 percent of the project’s total cost, with the remaining 15 percent covered by the Ecuadorian government.

President Correa said that “the launching of this project would be a historical event as it represents one of the biggest foreign investments in Ecuador and will create about 4,000 direct jobs and 15,000 indirect jobs in Ecuador.”

South America; Energy Newswire

[Venezuela & Ecuador]– Venezuela, Ecuador Exploring for Gas in Gulf of Guayaquil

Venezuela and Ecuador’s state energy firms said Wednesday that exploration is under way at a test well in Ecuador’s Gulf of Guayaquil, with expectations of finding up to 1.3 trillion cubic feet of natural gas.

The two firms, Petroecuador and Petroleos de Venezuela, or PdVSA, announced their plans a year ago to drill for gas in the gulf’s 300,000-hectare block 4.

[Colombia] – Petrolifera Executes Onshore Colombian License Contract with ANH

Petrolifera has executed the Magdalena exploration contract with the Agencia Nacional de Hidrocarburos (“ANH”) for the conversion of the Sierra Nevada II TEA into the Magdalena License, covering lands adjacent to the company’s Sierra Nevada License in the Lower Magdalena Valley, onshore Colombia. The Magdalena License comprises approximately 595,000 acres that is considered to be mainly prospective for natural gas and natural gas liquids. The minimum work commitment associated with the Magdalena License for the initial 15 month phase is primarily 150km2 of 3D seismic. As required by ANH, Petrolifera has established and funded a US $4.1MM trust, which in effect funds the assigned value of the initial work commitment of the License.

[Brazil] — Chevron: New Oil Law Reduces Opportunities in Brazil

Changes to Brazil’s oil laws don’t allow much space for international oil companies to take part in recent offshore oil finds, the vice president for global upstream and gas at U.S. oil major Chevron Corp. said Wednesday.

In September, Brazil’s government proposed changes to the country’s regulatory framework, giving the government a greater stake in the discoveries and state-run energy giant Petrobras the lead role in development.

Corporacion Andina de Fomento Sells $1 Billion of 10-Year Notes

Corporacion Andina de Fomento sold $1 billion of 10-year notes, according to a person familiar with the transaction.

CAF sold the bonds to yield 4.5 percentage points above U.S. Treasuries, said the person, who declined to be identified.

[Source] — Bloomberg

Laying the foundation for a tri-nation Boliviaran mining giant in South America

[South-South Cooperation] – Ecuador, Venezuela, Bolivia

The Ecuadorian government announced plans yesterday of the establishment of a joint mining company with the country of Venezuela and possibly Bolivia. You can read all the vague details in this article from Chinamining.

“We are going to build a great mining company in association with Venezuela and perhaps with Bolivia to exploit some veins of mine ore returned to the State from private hands,”said Ecuadorian Minister of Mines and Petroleum Derlis Palacios.

Ecuador Pays 35 Cents for Defaulted Bonds in Buyback

Ecuador paid 35 cents on the dollar to holders of as much as $3.2 billion of defaulted bonds and gave creditors a second chance to sell back their securities.

The payout is 5 cents more than the minimum price set by the government and the 30-cent payout offered by Argentina in its 2005 debt restructuring. Ecuador didn’t say how many investors participated in the buyback.

The government, seeking to pressure bondholders into participating, said it won’t improve the offer to those creditors who hold out of the buyback auctions. President Rafael Correa halted payments in December on $510 million of 2012 bonds and in March on $2.7 billion of 2030 bonds, saying the securities were “illegitimate” and “illegal.” A drop in oil exports has sparked a tumble in Ecuador’s reserves.

The repurchase prices “reflect the resources of the republic and are responsive to the majority of the offers received,” Finance Minister Maria Elsa Viteri said in a statement. “The republic will not offer equal or more favorable terms to those being offered to holders of bonds presently.”

Ecuador’s stance is similar to that of Argentina after its 2005 debt settlement. Creditors holding $20 billion of the bonds Argentina defaulted on in 2001 rejected the government’s offer of about 30 cents on the dollar. Then-President Nestor Kirchner pushed legislation through congress that blocks the government from making a second offer to creditors.

Click here to access the full article from Bloomberg

Newswire: Latin America

Latinamerica foreign trade forecasted to contract 9 to 11% in 2009
The main impact for Latinamerica of the global financial crisis and economic slowdown has been the contraction of trade, so far in the range of 9 to 11%, revealed Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latinamerica and the Caribbean, Cepal.

“The strongest impact we are seeing in the region is the fall in trade volumes. I believe that the “shock” of the contraction of global demand for our goods and services is our most relevant issue”, said Bárcena in an interview with the Cuban daily Granma.

She recalled that when the last big crisis Latinamerica’s foreign debt was equivalent to 24% of GDP, while in 2008 it had dropped to 8%.

Latinamerican Liberals hold congress in “Bolivarian” Venezuela
Liberal political parties and thinkers from Latinamerica are holding their annual congress this week in the Venezuelan capital Caracas. The event is in the framework of the 25th anniversary of the local branch Cedice-Libertad and will promote debates on liberal policies to address poverty and the current global slowdown.

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The congress is bound to spark some reaction among President Chavez followers since his Bolivarian revolution and XXIst Socialism stand at the opposite end of the political spectrum from the Liberals and the concept of individual freedom.

The two events will be taking place during a particularly sensitive week since President Chavez has ordered the nationalization of oil industry subcontractors, banks, steel industry, food processors and farm land considered idle.

Foreign direct investment to Latam reached 139 billion USD in 2008
Direct foreign investments in Latinamerica and the Caribbean are showing a significant resistance to the global crisis and in 2008 reached a record 139 billion US dollars, up 9.4% from the previous year according the United Nations Conference on Trade and Development.

Latinamerica’s bicentennial independence festivities begin in Bolivia
Bolivia’s commemoration on Monday May 25th of the 200th anniversary of the first uprising in Latinamerica against the Spanish colonial empire will also mark the beginning of similar independence celebrations along the continent which will peak in 2010.

Third re-election running “inappropriate” admits Colombia’s Uribe
Colombia’s President Alvaro Uribe says it would be “inappropriate” for him to seek a third consecutive term. His statement comes two days after the Senate approved a referendum that would ask voters to permit him to run again. Uribe did not, however, clearly rule out a re-election bid.