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Archive for Tuesday, April 17, 2007

Ethanol deal a pain for Venezuela

Alternative to be offered to Brazil at energy summit

April 17, 2007

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— President Hugo Chavez attempted to derail a U.S.-Brazil ethanol agreement as host of an energy summit on Monday, offering his own development plans for South America using Venezuela's vast reserves of oil and natural gas.

Despite Chavez's clash on ethanol with Brazilian President Luiz Inacio Lula da Silva, the two leaders smiled and shoveled cement side-by-side for the foundation of a new petrochemical complex in eastern Venezuela before they flew to Margarita Island for the summit.

Chavez has pledged to explain to Silva his sharp criticisms of last month's U.S.-Brazil ethanol agreement, but neither leader mentioned ethanol right away.

"Only united will we be great," Chavez said in a speech at the Jose petrochemical complex, with Silva and the presidents of Bolivia and Paraguay at his side. "That great power isn't Venezuela. That great power isn't Brazil. ... That great power will only be known as South America."

Chavez repeated his accusation that the U.S. plotted a brief 2002 coup against him and warned that if the U.S. tries to topple him in the future, "there won't be a single drop of oil for the United States." He said any U.S. invasion of Venezuela could lead to a "100-year war."

Chavez has pledged to offer an alternative proposal to "overthrow" the U.S.-Brazil ethanol agreement, which he calls a "cartel" that would monopolize arable lands and starve the poor - concerns shared by his Cuban ally Fidel Castro.

The United States and Brazil are the world's two biggest producers of ethanol - the alcohol-based fuel made from crops such as sugarcane or corn. They signed an "alliance" last month to promote its production in the region and create international quality standards to allow it to be traded as a commodity like oil.

Chavez has not said what he would do to oppose that plan, other than allude to his lobbying efforts against other U.S.-proposed trade agreements.

The new petrochemical plant involves Brazil's Braskem SA and Pequiven, a division of Venezuela's state oil company. The two signed joint venture agreements to build the new petrochemical complex and plan to invest about $2.9 billion in a complex that will produce ethylene, polyethylene and other petrochemical products.

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