Pacific Rim nations mull energy sharing

Jan. 25, 2011 at 3:45 PM   |   0 comments

SANTIAGO, Chile, Jan. 25 (UPI) -- Latin America's Pacific Rim nations are actively considering participation in energy-sharing plans that may reduce overall costs that remain a constant burden on national budgets.

Among the chief beneficiaries of the project will be Chile, which has some of the highest energy costs in the region. Public unease over energy costs erupted into unrest in southern Chile this month after the government tried to do away with state subsidies. The resulting spike in natural gas prices led to riots, which left two women dead.

In a compromise deal that calmed the citizens, the government agreed to keep the subsidies and reduce them in stages.

Ambitious plans for energy sharing among the regional countries have been on the cards for some time but haven't been implemented because of disagreements over procedural issues and regional politics.

The Chilean government especially is keen to advance negotiations on the energy sharing plans as it expects to reduce costs by up to 25 percent through regional sharing mechanisms.

One of the most frequently mooted outlines of the energy sharing projects involves an investment of $950 million into works that include the installation of 1,576 miles of electric cables. A U.N. report suggested that integration of various national grids could generate revenues of $3 billion a year from 2014.

An ongoing U.N. study suggested that energy prices would fall further if Bolivia came into the proposed partnership, Santiago Times reported.

It said Chilean President Sebastian Pinera has been searching for ways to lower the cost of energy in Chile and energy-sharing plans with other nations in the region may be the answer.

A regional electricity grid partnership may involve Colombia, which generates electricity using a variety of resources, including oil, natural gas, coal and hydroelectric sites.

Colombia has said it plans to increase its production of hydroelectric power, raising its share in total electricity production from 66 percent to 72 percent of the total produced in the country.

Chile has set sights on clinching a production sharing deal with Colombia and also announced targets for raising its own use of renewable sources for electricity production.

Progress on an energy sharing deal was delayed by slow movement on negotiations to agree on a pricing mechanism for intra-regional electricity transfers.

The talks received a setback from recent rows in Europe that led to Russia interrupting or cutting off entirely gas supplies to recipients. Relations between regional countries remain volatile and have fed into critics' fears the energy sharing plan is inherently flawed as it will increase vulnerabilities of Latin American nations to political maneuvering among countries receiving or supplying energy to neighbors.

Critics of the plan also said politicians' rhetoric on the plan might be too much too soon. Chilean economist Vivianne Blanlot said in comments cited by The Santiago Times, "Countries that have truly integrated their energy supplies, such as Canada and the United States or the European Union, have been working on it for decades."

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