Posted by BrazilMax:March 26: Brazil's green offensive
Edited by Jonathan Wheatley, Brazil correspondent
Brazil's president Luiz Inácio Lula da Silva will meet Italian prime minister Romano Prodi in Brasília on Monday and US president George W.
Bush at Camp David on Saturday in two more attempts to drive forward what is becoming Brazil's big strategic issue of the moment: opening new markets for ethanol and other green fuels.
Brazil is attracting billions of dollars in foreign and local investment in green fuels and is leading efforts to encourage production in other countries. Mr Lula da Silva hopes to reach agreement on a deal between Petrobras, Brazil's state-owned oil group, and ENI of Italy on joint biodiesel projects in Angola and Mozambique.
On Saturday, he hopes to make further progress on the agreements reached during President Bush's recent swing through Latin America. US diplomats have stressed they do not want relations with Brazil to become too focused on ethanol - suggesting continued resistance to dismantling US tariffs and subsidies that keep imports of Brazilian ethanol to a minimum.
But Brazilian diplomats say they are willing to make concessions within the current Doha round of world trade talks on Brazil's own barriers to industrialised goods and services, so the leaders may be able to cement their increasingly friendly relations with something that looks like progress.
Argentina's energy bust-up
Last week's bust-up between the Argentine government and Petrobras, Brazil's state-owned oil group, was a sharp reminder that the problems besetting Argentina's energy sector have not gone away.
Sérgio Gabrielli, Petrobras's chief executive, was voicing concerns shared throughout the industry when he said investment was being discouraged by a continued freeze on energy prices - a result of the
2002 financial crisis and an attempt to control inflation that last year was almost 10 per cent. Industry leaders say it makes more sense to invest elsewhere where prices are significantly higher. But most are afraid to criticise the government's distortionary policy openly, despite the fact that Argentina's oil and gas reserves are rapidly dwindling while a fast-growing economy and bargain prices mean demand for energy is higher than ever. Executives keep quiet for good reason:
planning minister Julio De Vido tersely countered that Petrobras "will see its contracts seriously affected" if it fails to invest enough.
Meanwhile, President Nestor Kirchner's recent complaints that Repsol-YPF is failing to invest enough has prompted renewed speculation that the government plans to buy back part of the formerly state-owned oil company - perhaps as much as 20 per cent, worth around $3bn.
The government denies it has any such plans. But there is a good chance that local business leaders close to government could buy a share instead. That would soothe concerns over foreign ownership of Argentine companies after foreign investors flooded in during the untrammelled liberalism of the 1990s. It might even lead to greater investment in exploration and production - without which there is an increasing likelihood that in the next couple of years Argentina could become a net importer of energy.