- Robert Mosbacher, Jr., Chairman, Mosbacher Energy Company
- Neil Parsan, Ambassador of Trinidad and Tobago to the United States
- Leandro Alves, Head of the Energy Division, Inter-American Development Bank
- Keisuke Sadamori, Director for Energy Markets and Security, International Energy Agency
- Eric Farnsworth, Vice President, Council of the Americas
- Coral Davenport, Energy and Environment Correspondent, National Journal (moderator)
Energy is emerging as a strategic issue in the Americas, one that can bolster hemispheric cooperation to unlock the region’s potential for energy independence and raise economic competitiveness. With resource finds ranging from the tar sands in Canada to the offshore pre-salt oil reserves of Brazil, more energy production could shift toward the Americas if governments in the region adopt the necessary regulatory reforms. These changes can help attract private sector participation and drive regional cooperation, realizing the region’s energy production potential. Some of these reforms have already begun in countries such as Brazil, Colombia, and Mexico.
Challenges for the Energy Sector
AS/COA’s Eric Farnsworth opened the discussion, saying energy is the key factor that will set the course for a historic transformation within the region as a means to increased cooperation. Energy can significantly raise the region’s geopolitical importance and boost economic dynamism, he noted. The potential for energy production in the Americas is vast if governments can implement market-led solutions in partnership with the private sector. He added, though, that many countries in this region must still pursue reforms to increase private participation in the resource industry and establish a regulatory environment that incentivizes the necessary investments in production, generation, and transmission.
Robert Mosbacher noted that the development of fracking technology, the gradual improvement of geographical survey imaging, and creation of advanced drilling techniques are all a result of the favorable economic climate that has incentivized investment in the energy industry. Technology and investment are shifting the axis of energy production and the influence of players in the market. He noted that Brazil could become a top energy producer but faces significant challenges, while Colombia should begin to benefit from its favorable contract framework. Venezuela, despite its complicated politics and challenging investment environment, still has an extraordinary capacity for production and yet-untapped oil sands. Mosbacher pointed out several challenges to the energy industry in the region, including high costs and long lead times from project development to execution.
Energy as a Vehicle for Regional Cooperation
Keisuke Sadamori, director for energy markets and security at International Energy Agency (IEA), commented on the medium-term trends in the global energy market outlined in the IEA's latest World Energy Outlook report. The largest increase in energy demand is expected to come from emerging Asian economies, but among OPEC countries only Iraq has the spare capacity to increase supply. Meanwhile, the remainder of the energy supply is expected to come from North America. Ambassador of Trinidad and Tobago Neil Parsan noted that smaller countries will also be key suppliers, since his country has become a leading producer of natural gas. “Natural gas is the oil of the twenty-first century,” he said.
Leandro Alves, head of the energy division of the Inter-American Development Bank, notes that the region has a low population relative to its energy production potential, though demand from Latin America’s middle class is increasing. The region has one of the most diversified energy matrixes in the world, with renewables accounting for 10 percent of energy production. In addition, the current trend of higher energy prices coupled with decreasing set-up costs bodes well for alternative energy sources in the Americas.
The participants agreed that energy can be the vehicle for regional integration as it can foster engagement beyond ideology and politics. The key steps for the region include sharing knowledge on regulatory issues, developing partnership mechanisms with the private sector, and strategically integrating energy corridors. Through regional cooperation and working to facilitate the investment climate, the hemisphere can meet the region’s energy needs and unlock opportunities for increased competitiveness, growth, and economic sustainability.