China, Latin America & the US: Troubled Energy Triangle

We are pleased to present another working paper of the Inter-American Dialogue’s Energy Policy Group, prepared by Dialogue senior fellow Genaro Arriagada and Ramón Espinasa of the Inter-American Development Bank. A distinguished Chilean analyst and former minister of state, Arriagada has led the Inter-American Dialogue’s Energy Policy Group since its establishment in 2009. Espinasa is the lead oil and gas specialist at the energy division of the Inter-American Development Bank (IDB), and previously served as the chief economist for Petróleos de Venezuela (PdVSA).

In this working paper, Arriagada and Espinasa analyze the dynamic “energy triangle” constituted by China, the United States and Latin America. They review the implications of the United States’ increasing domestic energy production, China’s rapidly expanding energy needs, and the changing composition of the energy matrix in both countries for global patterns of energy production and consumption. The authors also detail the challenges faced by energy-rich countries in Latin America, where production and investment have contracted over the past decade.

For Arriagada and Espinasa, the complementary needs of China and Latin America create the possibility of a mutually beneficial relationship in the twenty-first century. They evaluate three principal forms of Sino-Latin interaction in the energy sector. These include: China’s imports of Latin American energy; its foreign direct investment in Western Hemisphere energy resources; and oil-backed loans from Chinese banks to Latin American governments. Arriagada and Espinasa conclude that only first of these is conducted in a way that is satisfactory to both parties, and that many gains from cooperation remain unrealized.

This working paper is part of a series of studies carried out through the Dialogue’s initiative on energy policy in the Americas. Previous papers have dealt with a diverse set of energy policy issues, including the opportunities for shale gas in Latin America, social conflicts over energy development, the prospects for nuclear power, and the management of Brazil’s national oil company Petrobras. Our aim is to inform and shape national and regional policy debates on the energy challenges confronting the countries of Latin America, improve the quality of attention to those challenges, and encourage multilateral cooperation to address them.

The Inter-American Dialogue’s Energy Policy Group is a professionally and politically diverse group of some 20 energy analysts, corporate leaders, and policymakers, created with the generous support and cooperation of the Inter-American Development Bank. The views expressed in this working paper do not necessarily reflect those of Energy Working Group members or the Inter-American Dialogue.

Michael Shifter 2
Michael Shifter
President


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