Latin America: Energy Supply, Political Developments, and U.S. Policy Approaches

Publication Date: October 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

Type:

Abstract:

Western Hemisphere countries supply the United States with almost 50% of its imported oil and petroleum products. Three countries in the hemisphere -- Canada, Mexico, and Venezuela -- account for the lion's share. Other significant oil producers in the region include Ecuador, Colombia, Brazil, Trinidad and Tobago, and Argentina.

In terms of proven oil reserves, the Western Hemisphere has about 24% of reserves worldwide. After Canada, Venezuela has the second largest amount of proven oil reserves in the hemisphere, almost 80 billion barrels, but this does not include as much as 270 billion barrels of extra-heavy and bitumen deposits from the Orinoco belt. If these deposits became recoverable, Venezuela's proven reserves would exceed those of Saudi Arabia. In terms of natural gas, the United States has the largest amount of proven reserves in the hemisphere, about 37%, followed by Venezuela, with 29%. Canada, Trinidad and Tobago, and Bolivia also have sizeable reserves. Almost all of the gas imported by pipeline into the United States comes from Canada, while Trinidad and Tobago accounts for about 70% of U.S. liquified natural gas imports.

While oil and gas producers such as Venezuela, Mexico, Argentina, Bolivia, Colombia, Ecuador, and Trinidad and Tobago are net energy exporters, most other Latin American and Caribbean nations are net energy importers. Moreover, with the exception of Trinidad and Tobago, most Caribbean and Central American nations are highly dependent on energy imports.

High oil prices have spurred the rise of resource nationalism in several Latin American energy-producing countries, which has raised concerns about access to energy resources and political interference with the level of energy production and investment in the region. Such nationalism is often fueled by poverty, and appears to be strongest in countries where people believe that they are not benefitting from the exploitation of their countries' natural resources. Yet many analysts assert that such nationalism is a logical outcome of higher energy prices, and is similar to the actions by energy-producing countries around the world that want to capture more of the profit from their natural resources.

This report examines Latin America's current political environment and its apparent effect on energy production in the region. It also examines regional integration efforts, including Venezuela's oil programs offering oil to many Latin American and Caribbean countries on a preferential basis, the Mexico-led MesoAmerican Energy Integration Program, and the proposed South American natural gas pipeline. The report also examines policy approaches that have been proposed for increased hemispheric energy cooperation, congressional interest in the topic of hemispheric energy security, and related legislative initiatives in the 109th Congress. This report will be updated to reflect any additional legislative action taken through the end of the 109th Congress.