IMPACT OF PRESIDENTIAL POWER IN SOUTH AMERICAN ENERGY MARKETS

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2011)
CHAPTER 6B
IMPACT OF PRESIDENTIAL POWER IN SOUTH AMERICAN ENERGY MARKETS
Pedro Serrano Espelta
Marval, O'Farrell & Mairal
Buenos Aires

PEDRO GARCIA, is a partner at the Veirano Advogados office in Rio de Janeiro. Pedro is a member of Veirano since 1996. He is specializes in corporate, mining and antitrust Law. Pedro has wide experience in local and cross-border transactions, negotiation and drafting of commercial agreements, regulatory and environmental aspects of mining ventures and client representation in antitrust proceedings. In the Mining Sector, Pedro is frequently involved in the structuring of new investments in mining ventures, including in purchase and sale transactions of exploration and exploitation tenements, due diligences before the National Department of Mineral Production - DNPM, option and lease agreements, royalty contracts, M&As, financing of mining ventures, ore purchase and sale agreements, service agreements, including construction and development of mining sites and agreements with surface owners. Pedro also represents clients in the segments of urbanism, infrastructure and logistics in the formation of consortium agreements, commercial contracts and Public Tenders. From an antitrust perspective, Pedro is very well versed in the analysis of potentially anticompetitive agreements, submission and approval of M&As before the Administrative Council of Economic Defense - CADE, negotiation of Terms of Performance Commitment and economic restrictions with the antitrust authorities, anticompetitive practice proceedings and compliance programs. Pedro has represented clients of a variety of industries in antitrust proceedings, including in the Pharmaceutics (Human and Animal Health), Mining, Oil & Gas, Telecommunications and Finance Sectors. Pedro's international experience includes two years of training and studying in Europe. He was a visiting attorney at Simmons & Simmons in London and Lisbon, practicing in the corporate, capital markets and antitrust departments. During his time in Europe, Pedro also took Post Graduate courses in International Contracts and European Competition Law at the Classic College of the University of Lisbon and at King's College of the University of London. As a fluent Spanish speaker, Pedro is deeply involved with the Latin American Legal Alliance in which Veirano participates with other sizeable law firms in Latin America.

Introduction

1. Thank You. Thank you very much to the Foundation for inviting me to this Institute again and thank you Don for putting together this panel to address development trends in the different regions of the globe.

2. Task. My task today is very simple. To address the development trends of South America, in 15 minutes. I don't know if I will make but I promise that I will do my best.

3. Don Contact. When Don contacted me to for this panel he asked me what I considered could influence South American energy markets in the future. I immediately mentioned: "Politics". So here I am, trying to explain to you what I meant when I said "Politics" to Don.

4. SA Republican System of Government. Checks and Balances. Most South American countries are democracies with a republican system of government where governments are divided into the three traditional branches, executive, legislative and judicial. In addition, all constitutions implement a system of checks and balances to induce the three powers to cooperate and to prevent one branch from gaining undue influence over the others.

5. Executive Power. For different reasons it seems that the checks and balances systems do not work very well in Latin America. The executive power always manages to unduly influence the others and gain much more power that the one granted by applicable laws. Thus, presidential elections are decisive to South American countries.

6. Focus of the Presentation (thesis). To the effect, I will focus on the large impact that presidents have in South American countries, particularly in the energy markets.

7. Thesis and relation. To try to prove my thesis (which of course is not a novelty), I will analyze the relation between the changes of South American presidents with the movements in the energy sectors of each country during the last 20 years.

8. Understanding History. Pendulum. You may ask yourselves, this guy is going to talk about history so where are the trends. Well, most South Americans say that our policies are like a pendulum. Only understanding recent history will allow us to foresee what future trends may be.

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9. Countries. Good and Bad Guys. In the movies, we always have the good guys and the bad guys. Well, South American countries can also be grouped into good and bad guys. On one side we have Argentina, Venezuela, Ecuador and Bolivia. On the other side we have Braxil, Chile and Peru. Does anyone know in which group are the bad-guys?

Country	Oil Production (barrels / day)	Oil Reserves (billion barrels)	Gas Production (billion cubic feet)	Gas reserves (trillion cubic feet)
Argentina	1990: 520,000 1998: 916,000 2009: 794,000	1990: 2.3 2001: 3.1 2010: 2.5	1990: 630 2006: 1,600 2009: 1,460	1990: 27.3 2010: 14.7
Venezuela	1990: 2,260,000 2000: 3,460,000 2009: 2,471,000	1990: 58.5 2010: 99	1990: 760 1998: 1,110 2009: 650	-
Ecuador	1990: 286,000 2006: 536,000 2009: 485,000	1990: 1.5 2010: 6.5	1990: 4 2009: 10	1990: 4 2010: 0.28
Bolivia	1990: 26,000 2007: 61,000 2009: 53,000	-	1990: 107 2008: 518 2010: 446	1998: 18.3 2008: 26.5 2010: 14
Brazil	1990: 884,000 2009: 2,577,000	1990: 2.8 2010: 12.8	1990: 97 2008: 446 2009: 363	1990: 3.85 2010: 12.86

VENEZUELA
PERIOD	PRESIDENT	TAKE OFFICE	ENERGY POLICY
February 2, 1989 May 21, 1993	Carlos Andrés Perez Rodriguez	Presidential elections	Continued the "Oil Apertura", under the mode of Joint venture (participation agreement) and strategic associations to reactivate fields, produce crude, exploit natural offshore gas, explore prospective areas, and create mixed

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