Good evening, ladies and gentlemen. It is an honor to be here.

I would like to thank Ambassador Jeffrey Davidow, Chairman of the Institute of the Americas, for giving me the opportunity to address such a distinguished audience this afternoon.

Regarding the subject of this conference, “Repositioning Latin America’s Energy Future”, I would like to share with you my thoughts on the prospects for energy integration in the Americas, with emphasis in Latin America and the Caribbean, and its potential to improve the economic and social well being of the people in the region.

While it is true that the demand for hydrocarbons continues to grow, and that dynamic business opportunities are plain to see, the challenges that the global hydrocarbons industry confronts now and in the future, are also clearly evident. For example, scenarios for the 2004/2009 time-span highlight the great common challenge of having to supply the raw material to meet increasing consumer demand and expectations, together with increments in stringent quality specifications, as well as the protection of the social and natural environments.

In the midst of all this, we can see on the horizon a greater efficiency in energy consumption, due to the adoption of new technologies and management tools. This reality is coming together with the establishment of economic policies aimed at promoting new investments and increasing the value of natural resources for the purpose of converting them into instruments of sustainable development.

Exploration and production will require enormous capital contributions, as well as technological innovations and management knowledge, to produce oil and gas in the volumes the world will need in the next 25 years. The challenges, however, are not confined to the upstream, but will also extend to the processing of raw materials and their byproducts. In this sense, from 2000 to 2030 investments worldwide are estimated at 2.8 trillion dollars: 2.2 trillion dollars for exploration and production, 205 billion dollars for non-conventional hydrocarbons (40 billion dollars for GTL included) and 412 billion dollars for refining.

These considerations are fundamental to understanding the complexities of international energy markets, according to our scenarios and based on data released by several specialized and authoritative sources. In this sense, we have to point out, first of all, that the prospects of the international energy market look promising in the context of world economic growth, which is estimated at 3.8% per year. The United States growth is estimated at an annual average of 3%, which is why it remains among the world’s fastest growing economies, together with that of emerging Asian countries, chief among which are China and India. It is also worth pointing out that more than 60% of the projected increase in the world’s primary energy demand until 2030 will come from developing countries, especially those in Asia.

In terms of proven reserves, there are approximately 1.3 trillion barrels of oil in the world, of which some 800 billion barrels are derived from OPEC countries. By most estimates, the Americas count on about 140 billion barrels, roughly 80% of which is located in Latin America. Regarding natural gas, world reserves stand at 5,500 trillion cubic feet, of which 96% are located outside North America. Latin America holds around 259 trillion cubic feet of natural gas.

Alternative energy sources will become more important, but they will meet only a small fraction of rising demand. Fossil fuels are still expected to represent almost 90% of total world energy demand in 2025. World oil demand will increase at a rate close to 2% per year, from 81 million barrels per day in 2003 to 112 million barrels per day in 2025. The United States consumption is expected to rise 200 thousand barrels daily (1.3%) per year. In the case of Latin America, strong growth could see energy demand increasing 2% per year, from 7.5 to 11 million barrels per day.

Over the next two decades, natural gas consumption could virtually double, from the 90 trillion cubic feet consumed in 2001 to some 176 trillion cubic feet by 2025. This gas will be consumed above all as an electricity generation fuel, although the expected growing demand of GTLs, or gas-to-liquids plants, should also be taken into account. The United States’ natural gas demand will grow at an annual average of 1.4%, from 24 billion cubic feet per day in 2002 to a little over 31 billion cubic feet per day in 2025. We also expect the Latin America gas consumption to increase at the amazing rate of 5% per year, from 15 billion cubic feet per day in 2003 to 43 billion cubic feet per day in 2025.

Given the depth of our reserves, Latin America will continue to be one of globe’s leading providers. This is very significant, especially from the standpoint of Western Hemisphere energy security. Latin America has been a major source of oil and natural gas for decades and now supplies the United States, for instance, with more than 3.3 million barrels of oil per day. That’s equivalent to about one-third of U.S. oil imports.

Despite the significant strides that we have taken, poverty remains a chronic problem in our region, where one quarter of the world’s population, that’s 1.6 billion people, do not have access to electricity. Moreover, it is unacceptable that 100 million Latin American citizens live with less than one dollar per day. We must dispel the pessimistic view that nothing can be done to ameliorate poverty in our region. We have the resources, we have the expertise, but we need to integrate our efforts and convince ourselves that we hold the power to solve this problem.

Our common goal is to reduce poverty through the capitalization of our resources. The challenge is twofold: to ensure the availability of adequate supplies for the consuming nations, while securing that the value of our production is used for our well being and the development of our region. This includes the improvement of the education level of our people and the infrastructure we need to strengthen our efforts at integration.

Within this context, Venezuela enjoys major competitive supply advantages in the face of growing oil and gas demand. We not only have the Western Hemisphere’s largest reserves of hydrocarbons, but our industry has been reinvigorated since the work stoppage and sabotage that we confronted in December 2002 and January 2003. As it is well known, that crisis was unprecedented in the oil industry, both in terms of its political motivations and its serious socio-economic consequences. Since then, PDVSA has successfully overcome that obstacle in an effort that is regarded as epic both at home and abroad. The company is now concentrating its efforts on consolidating the achievements attained, with the purpose of strengthening its national and international image as an ethical, competitive, and sustainable enterprise.

We believe in enhancing the value of our natural resources. Our oil industry is and will be even stronger and healthier both operationally and financially. Venezuela is the fifth largest provider of hydrocarbons in the world and the third largest provider to the United States. We have reserves of 78 billion barrels of crude oil, 235 billion barrels of heavy and extra-heavy crude oil in the Orinoco Belt, and 148 trillion cubic feet of natural gas. In 2003 our production capacity reached 3.6 million barrels per day. Financially, we achieved 46 billion dollars of global sales, with a net profit of 3.8 billion dollars. Moreover, the aim of our Business Plan for 2004-2009 is to add the maximum value to our huge oil and gas resources by investing 37 billion dollars, promoting at the same time the overall economic development of Venezuela.

Additionally, Venezuela ranks as the world’s eighth country with the largest gas reserves. If we add to this: the present and future human resources of our oil industry; our technological and financial synergies; our national and international partners; and our geographic proximity, it is evident that Venezuela has the capacity to become an even stronger producing and exporting power.

We are making use of all our capabilities and assets to generate and multiply wealth, to transform our oil industry into a tool for sustainable development and the well being of our country and region. This also embodies a commitment to improve the quality of life of our customers, to whom we reiterate our spirit of cooperation in an ethical, competitive and sustainable manner, so that we can truly become a complement to their energy needs.

In this sense, Venezuela underscores its commitment to regional integration. Our view is based on complementary energy integration. The war against poverty in the region has an ally in our Government and in the Venezuelan oil industry. Overcoming the scourge of poverty calls for the integration of our countries and a search for continental synergies in all fields of endeavor.

In Venezuela we are going through a process that will take participative and proactive democracy to unprecedented levels, in which the historically ignored and dispossessed sectors of the population will become leading players. Within this framework, the Venezuelan national oil industry, hand in hand with the State, will undertake a role of social valuation and democratization of the wealth that generate hydrocarbons. New awareness of the potentiality of our resources, particularly energy, to improve the quality of life of our people must be seen from the perspective of the owner, for whom the priorities, strategies and behavior not necessarily have to be different from those of the consumers.

As is very well known, Venezuela has had a fruitful exchange of ideas regarding the needs, opportunities and challenges faced by our region. Many high quality technical analyses have been done and many different approaches have been proposed for the desired integration, proving its benefits. Our energy policy has been openly welcomed, as well as our support to the OPEC production quotas directed to achieve a market balance and fairer prices for both consumers and producers.

However, we have to keep in mind that there are many factors influencing fuel prices. The imminent deficit in refining capacity in the Atlantic basin and in the United States produces a significant increase in gasoline prices. At the same time, given the links among energy commodities, the increase in gasoline prices produces a strong impact (in the order of 60 to 80%) in the increase of oil prices. Additionally, the speculations in the future markets distort constantly the oil prices. Prices are also influenced by estimations in inventory levels and by geopolitical factors. Keeping the flow of energy going and prices stable is not only in the world’s best interest. It’s in Venezuela’s best interest, too. That remains our goal both as an OPEC member and a provider of energy to the United States and the rest of our customers in the world.

Additionally, Venezuela keeps open all available energy-related communication channels with our southern neighbors, with the aim of strengthening commercial and cultural links, as well as strengthening cooperation mechanisms on hydrocarbons. Cases like Argentina and other Latin American countries with energy deficits are clear evidences that the energy integration has to be speeded up. We offer our availability of energy resources and our capability to provide a secure and reliable supply. At the same time, we have being envisioning with several Caribbean and Latin American countries, endeavors like Petro-América, as well as Petro-Caribe. This last initiative was recently announced during the 6th Western Hemisphere Meeting of Energy Ministers in Trinidad & Tobago. In this way, Venezuela demonstrates its commitment to continue to play a key role in Latin American and Caribbean integration.

In Venezuela, we are witnessing the beginning of a time in which a better quality of life will be the privilege of the many, not the few, which is why we are democratizing the capital and wealth generated by the Venezuela’s vast hydrocarbons reserves. The new PDVSA is a company dedicated to the task of enhancing the value of not only these resources, but also of the human being.

Let’s increase and speed up our shared efforts to make the “Repositioning for Latin America’s Energy Future” a bright reality.

Thank you very much.