World Energy Outlook 2006

investment in 2004. Concessions for the construction of over 10 000 kilometres
of transmission lines were awarded and the reliability of the integrated grid has
improved. Electricity generation and distribution have also been opened up to
private capital. Today 66% of the distribution capacity and 28% of the
generating capacity in the Brazilian electricity sector is privately owned.
Box 16.1: Regional Integration in South American Energy Markets
Brazil plays an important role in the South American energy market.
During the 1970s and 1980s, large multinational hydroelectric dams on the
borders of Brazil, Paraguay, Argentina and Uruguay were constructed,
providing the main drivers for regional energy integration. In 1991,
Argentina, Brazil, Paraguay, and Uruguay formed the Mercado Comun do
Sul (Mercosur) to promote intra-regional trade and to co-ordinate
macroeconomic policies.
In the late 1990s and early 2000s, projects for transmission grids and gas
pipelines boosted regional energy integration. Brazil signed agreements with
Venezuela, Uruguay and Argentina in early 2000 to import/export
electricity. Meanwhile, gas connections were built with Bolivia and
Argentina. There are now three transnational gas pipelines and several
electricity transmission lines linking Brazil with neighbouring countries.
Another cross-border project under discussion is “Blue Corridors” – a
pipeline network that would ultimately connect several cities across Latin
America, including Rio de Janeiro and São Paulo in Brazil, Buenos Aires in
Argentina, Montevideo in Uruguay and Santiago in Chile.
In February 2005, the Venezuelan state oil company, PDVSA, announced
the signing of 14 energy accords with Petrobras. The accords anticipate
cooperation in the oil, gas, refining, transport and petrochemical sectors, as
well as the exchange of biofuels technology and the possible participation by
Petrobras in an LNG export project in Venezuela. The two countries are
also interested in cooperating on a project to build a refinery in Pernambuco
State in the northeast of Brazil.
The nationalisation of Bolivia’s gas sector in May 2006 put a strain on
Bolivian-Brazilian relations. Bolivian imports covered 43% of Brazil’s
consumption in 2004. Future import levels are uncertain: prices are
currently being renegotiated. The assets of Petrobras in Bolivia have been
nationalised and the near-term prospects of expanding the Brazil-Bolivia
pipeline have dimmed.
Chapter 16 - Focus on Brazil 453
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