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Paraguay Inks Oil Deal to Advance on Energy Independence

December 11th 2012

Paraguayan president Federico Franco and President Energy guys
Paraguayan President Federico Franco (l) and President Energy officials.

On December 5th, President Federico Franco of Paraguay began a two-day official visit to Miami, invited by local petrochemical companies that are planning to explore oil in the the Chaco region of the South American country.

In one of his interviews, Franco stated that Paraguay has the largest oil reserves in Latin America and is looking forward to receiving US investors to conduct further studies in the Chaco. One day before his departure, the president visited the city of Neuland (about 350 miles from capital city Asuncion) and with representatives of President Energy Company led the symbolic act of officially beginning the oil exploration in Chaco, in which President Energy is expected to invest $92 Million. Seismic exploration trucks have already undertaken tests and exploratory drilling is set to begin.

In Miami, Franco met with representatives of President Energy in Miami and noted that the exploration of oil in Paraguay “means a tremendous added  value for [Paraguay’s] economy.” Franco “highly values Paraguay’s potential for energy independence and the its significance to secure an added value from oil and its byproducts.”

He added that “[oil exploration] will open a new area of development for the country, and further enhance what we already have in the agricultural sector and create value with our existing strategic resources." Franco received details of the latest digital technology in studies of geo-seismology undertaken by President Energy Co. in the territory of Pirity and Boqueron in the Paraguayan Chaco region. It was in the Chaco region that Paraguay fought a brief war with neighboring Bolivia in the 1930s, ostensibly over possible petroleum reserves. It is in the same region that it currently faces a restless insurgency.

The senior leadership of President Energy, Peter Levine and Richard Gonzalez, presented the research and methodology that confirm prospects for oil in Paraguay. According to President Energy analysis, there have been identified more than 150 million barrels of high quality crude oil, which can be refined at the state-owned Petróleos Paraguayos (Petropar) refinery at Villa Elisa in central Paraguay.

Franco, accompanied by two members of his cabinet: Minister of Industry and Trade Francisco Rivas and Minister of Schedules Fernando Pfannl, was given briefings on the technology, industrial equipment and logistics that will be installed once the oil exploration has begun in Chaco. Also joining Franco were Senators Blas Llano and Robert Acevedo.

President Franco met also with the leadership of Brightstar, who confirmed their interest in establishing headquarters in Paraguay in order to assemble 30,000 computers per month.  Brightstar will fulfill the demand of supplying computers to Paraguayan children, while the surplus will be exported overseas. Brightstar is a global company, headquartered in Miami, and is dedicated to computer and cell phone production technology.

Also, in an exclusive interview with Speroforum in Paraguay, Franco confirmed his government's desire for closer economic and political ties to the United States. This was confirmed last month when American Airlines began direct flights to the Paraguayan capital from the U.S. Franco's government and Paraguayan exporters are still experiencing the fallout of Paraguay's suspension from the MERCOSUR regional trade bloc. Paraguay's absence from a crucial vote allowed Venezuela to become a member of MERCOSUR, despite Paraguay's long-standing opposition. Paraguayan exporters complain of bureaucratic delays at the border with Argentina, while Paraguay struggles with diplomatic wrangling over its impeachment and removal of former President Fernando Lugo this year. The Organization of American States, however, has confirmed the constitutionality and legality of Lugo's dismissal.

Peter M. Tase is a long-time observer of Paraguayan political affairs and trade matters. He writes for Speroforum, from where this article is adapted.

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