Guatemalan Response to Central American Energy

UNCLAS GUATEMALA 000252

SIPDIS

DEPT PASS USTR

E.O. 12958: N/A
TAGS: ENRG EINV EPET BEXP ETRD PREL GT
SUBJECT: Guatemalan Response to Central American Energy
Initiative

REF: A. STATE 11181


B. 05 Guatemala 02806

C. 05 MEXICO 07466


1. Econoff met with GOG officials to discuss the new Central
American Energy Initiative (the Meso-American Energy
Initiative). GOG officials indicated that much of the
initiative has existed in various forms throughout the region
over the years. They added that, while this initiative is a
welcome possible solution to the high cost of energy and
increasing demand, it does not go beyond previous initiatives.
Furthermore, a regional natural gas pipeline would require the
participation of countries such as Venezuela or Colombia,
since Mexico does not have natural gas resources to export.


2. A regional refinery is of great interest to Guatemala.
Officials said that Guatemala and Belize are the only
petroleum producers in the region and Guatemala consumes the
most energy (25%) of the entire Central American region. They
felt that any regional refinery should be close to the area of
production and potential markets. They further indicated that
Guatemala is strategically located in close proximity to four
of the countries that would benefit from a regional
initiative, and has a pipeline infrastructure partially in
place.


3. GOG officials felt that the San Jose Accord (ref A) has
limited viability. They said that Guatemala alone could
consume the whole regional supply of oil exported under the
accord and that it offered few price incentives. Guatemala's
primary sources for oil have historically been the United
States, Mexico and Venezuela. However, Venezuela recently cut
off supply of heavy orimulsion fuel to Duke Energy, one of
Guatemala's major electricity generators, and has become
increasingly unreliable with oil shipments.

DERHAM