Oil, independence, and gunboat diplomacy

In Buenos Aires earlier this month, Assistant U.S. Secretary of State Thomas Shannon rejected theories that the U.S. Fourth Fleet, assigned to watch over South America, had been reactivated for offensive purposes. So that means defense, Brazilian Senator Pedro Simón observed, “but defending against whom?”

Before it was reestablished July 1, the Fourth Fleet had not functioned since 1950. Its operations had been absorbed by the Second Fleet, which patrols the Atlantic Ocean.

The senator related the fleet’s reactivation to recent discoveries of petroleum reserves under the Atlantic off Sao Paulo. They are so large, according to ex-Brazilian President Jose Sarney, that they “will turn the region into one of the great centers of petroleum production.” Simón pointed out that the zone of anticipated oil exploration extends 150 miles beyond the 200-mile limit of Brazilian maritime sovereignty.

A report last year from the James Baker III Institute, “The Changing Role of National Oil Companies,” sets the stage. The institute, whose namesake and honorary chair was President George H.W. Bush’s secretary of state, argues that because state-run oil corporations control 77 percent of the world’s oil reserves, the U.S. government needs to ward off “onerous government interference” with national companies and “break up … the monopoly power of oil producers.”

It’s that power, suggests analyst John Bellamy Foster (Monthly Review, July 2008), that enables states to use “oil resources to pursue national goals other than purely commercial ones.”

For an empire whose life-sustaining oil supply is precarious, that’s worrisome.

Meanwhile in Latin America plans are moving ahead to produce and distribute oil for the sake of human survival, regional independence and unity.

Member states of Petrocaribe, the cooperative energy project organized by Venezuela in 2005, met July 12-13 in Maracaibo, Venezuela. They agreed to adjusted terms enabling states to continue inexpensive purchases of oil from the Venezuelan state oil company PDVSA despite rising prices. Guatemala became the 18th Petrocaribe member, and Costa Rica is next in line.

Through President Hugo Chavez, PDVSA encouraged payments in goods and services. He asked states to produce their own oil by developing enterprises that together with PDVSA would extract oil from Venezuela’s Orinoco region. He encouraged the development of manufacturing facilities using oil by-products. Emphasizing local fertilizer production, Chavez announced the availability of urea, a prominent fertilizer ingredient, at a 40 percent discount.

Ecuadorian President Rafael Correa and President Chavez signed agreements July 15 to build a refinery on Ecuador’s Pacific coast that by 2013 will be processing 300,000 barrels of crude oil daily. The project costing nearly $7 billion will yield annual savings worth $3 billion through cutbacks in fuel imports. PDVSA will also build refineries in Brazil and Nicaragua.

Over four months, the Venezuelan and Bolivian governments have been formulating plans to explore and develop natural gas and oil reserves throughout Bolivia. PDVSA reportedly will invest $881 million in the initiative.

Areas of seabed under the Gulf of Mexico assigned to Cuba were opened for exploration in 1999. Since then, companies from Canada, Spain, India, Malaysia, Venezuela, Vietnam and China have taken the bait. Brazil’s Petrobras oil giant joined them last year. Cuban reserves are estimated as comparable to those of Ecuador, fourth highest in Latin America behind Brazil, Venezuela and Mexico.

Cuban oil production undertaken by the Cuban state oil company CUPET, together with foreign companies, is projected to reach 525,000 barrels a day in 10 years. Cuba presently utilizes 145,000 barrels a day.

In mid-July, Cuban oil authorities announced plans for a refurbished refinery in Santiago and expanded output from the refinery in Cienfuegos — built recently with Venezuelan help — aimed at an eventual daily refinery capacity of 350,000 barrels.

Increasingly in Latin America, oil production serves social and political ends. And barriers are up putting hydrocarbon resources off limits to northern predators. That’s where the dispatch of warships fits in, a traditional North American remedy.

Understandably, Senator Pedro Simón thinks of defense. “It’s a good moment,” he suggested, for the newly established Council of South American Defense “to study the roads to follow with the countries of the region.” He observed that Brazilian President Lula and President Cristina Fernandez of Argentina both “energetically spoke out against the Fourth Fleet. … We are arriving at common points of view,” he concluded.

atwhit @roadrunner.com