An Overview of the Privatization of the Latin American Oil and Gas Sector

This paper reviews some of the more important recent efforts to privatize energy resources in Latin America.1 It attempts to analyze the means by which various Latin American countries have adopted different schemes for privatizing their oil and gas assets. Privatization will play a major role in determining future energy supplies and prices — a concern to both energy producers and consumers. Foreign investment in energy sectors such as petroleum refining and marketing, electricity generation and transmission, and natural gas transmission have been permitted to a significantly greater extent than in the hydrocarbon production sector.

This paper is organized in two main parts. The first part of the paper addresses the economics of privatization — what motivates countries to privatize. It also discusses some of the common policy and legal issues associated with privatization. The second part of the paper reviews specific privatization efforts in those Latin American countries having significant oil and gas resources and electric power needs.