Energy Treaty of ALBA

V Summit - Tintorero, Venezuela - April 28 and 29, 2007

Energy Treaty of ALBA

The Republic of Bolivia, the Republic of Cuba, the Republic of Nicaragua and the Bolivarian Republic of Venezuela, hereinafter referred to as "the parties";

TAKING INTO ACCOUNT the Agreement between the President of the Bolivarian Republic of Venezuela and the President of the State of Council of Cuba, for the Application of the Bolivarian Alternative for the Americas, dated 14 December, 2004;

CONSIDERING, the Agreement for the Application of the Bolivarian Alternative for the Peoples of Our America and the Peoples' Trade Treaty, dated 29 April, 2006;

CONSIDERING that the Joint Declaration signed in Havana, on December 14th, 2004, states that, to reach the objectives of ALBA, a special focus must be placed on an energy integration in the countries of the region, which ensures the stable supply of energy products, to the benefit of the Latin-American and Caribbean societies;

RECOGNIZING the need to adapt to the changing conditions of the financial and hydrocarbons markets, and the need to guarantee the right of the peoples to access the energy resources;

CONVINCED of the need to achieve a strategic alliance between the States and peoples of Latin America and the Caribbean, based upon the principles of solidarity, cooperation, complementarity, and mutual benefit, in the pursuit of common goals.

CONSIDERING that currently, projects are being developed to construct refineries in the member countries, such as a refinery with a capacity of 150 thousand barrels per day in Nicaragua, another one with a capacity of 10 thousand barrels of asphalt per day in Bolivia, and the other one with a capacity of 65 thousand barrels per day in Cuba

CONSIDERING that it must be an objective of ALBA to ensure the universal energy supply as a right of our peoples, which is indispensable for education, health and production;

RECOGNIZING the need to establish a rational consumption pattern of energy use, in order to preserve the already scarce energy resources, natural resources, as well as forests, water and land

CONSIDERING that it is a must to promote policies that stop the energy wastage, which characterizes the predatory capitalist mode of production.

Have agreed as follows:

Article I

OBJECTIVE

The current Treaty is to ensure the energy matrix balance of each Party, on the basis of the construction of an ALBA energy matrix, founded on the criteria of rational energy use, in search for the maximum possible saving and energy efficiency, as well as, the development of sources of alternative energies in each of the Parties.

Article II

SCOPE

The Parties to the present Treaty commit themselves to developing their objective through the following fundamental lines of action:

1. Petroleum.

The Parties will have shareholding in a Bloc, the ALBA Bloc, of the Orinoco Belt of Venezuela, in such a way that they have at their disposal oil reserves, which guarantee the energy supply of their respective countries over the next 25 years.

Exploration and exploitation will be jointly carried out, and with the participation of all the ALBA countries, through a "GranNational" oil company called PETROALBA, which will operate in the Orinoco Belt. As more countries will join it, the ALBA Block will expand to guarantee reserves for long-term supply and the benefits that stem from marketing in third countries.

In cases where the refining capacity of the Parties will be created and enhanced in such a way that they have a sufficient processing capacity of crude oil to process the crude of the ALBA Bloc in the Orinoco Belt of Venezuela, and manufacture the products required to meet the domestic needs of the Parties, and also to supply, on conditions within the ALBA Energy Agreement, for the rest of the Parties.

The refining capacities that are executed under this Agreement will materialize in a way that permits the development of petrochemistry, based on the refining trends and export of the surplus products to the international market.

2. Gas.

The Parties reached an agreement to develop the initiatives that facilitate the signatory countries the gas supply. This is for them to have this source of economical and, less polluting energy as opposed to oil, in order to balance their ALBA energy matrix.

Through state mixed companies, projects will be financed for the joint exploitation of this resource, and for the development of the transport infrastructure and processing necessary for its use.

The Parties agree to develop the gas pipeline systems required to expand the use of gas in their territories and those needed to interconnect them with the respective continental area.

The Parties may work in partnership for the construction of plants for liquefaction and re-gasification of natural gas, in order to be able to count on the infrastructure necessary for the use of this source of energy, as part of the energy matrix of the Parties in the Caribbean.

The Parties commit themselves to introducing the gas into their energy matrix, in order to develop programs for the replacement of liquid fuels, promote the domestic consumption, and replace the liquids that are currently being used in the power generation park. In that case, the use of high efficiency and combined-cycle machines, with special emphasis on development programs for vehicular gas regarding the vehicle fleet, will be promoted.

The Parties will make their best efforts in order to develop, with reference to Gas, Petrochemical Hubs in their respective territories, with a view to producing fertilizers and inputs for the processing industry of plastics chain and other industrial inputs.

3. Electrical Energy.

In order to use all the sources of primary energy that are at their disposal, and also maximize the use of the hydroelectric, thermoelectric power, based upon gas and combined cycles, the Parties will promote the replacement of liquid fuels for gas or for other more economical fuels.

In order to diminish the losses derived from the transmission systems or from the consumption peaks, which are typical of the electrical system, The Parties will make utmost efforts to increase the support of their electrical national systems and the availability of the service in areas that are not served nowadays, through the introduction of distributed generation systems.

4. Alternative Energies.

The Parties will develop joint projects and research lines to drive the use of all the alternative energies available in their respective territories, such as: the geothermal, small-scale hydroelectric plants, wind power, solar power, etc.

5. Energy Savings.

The Parties will establish programs for the replacement of high energy consuming appliances for more efficient equipments, of incandescent light bulbs for energy saving light bulbs , of high liquid fuel consuming electricity generators for high efficiency gas and combined-cycle systems. Likewise, industrial conversion programs will be executed for them to develop their economies, optimizing the availability of the existing energy resources in their territory.

The Parties will introduce programs for the replacement of liquid fuels by natural gas in their respective vehicle fleet, in order to promote the use of public transportation.

Implementation: Gran National Energy Enterprise

In order to achieve the objectives of this Agreement, the Parties will create a Gran National Energy company, which will encompass those areas: oil, gas, refining, and petrochemistry, transport infrastructure development, storage, distribution, electricity, alternative energies and maritime transport, accordingly to sovereignty and current legal framework of each country.

The Gran National enterprise will be constituted as a corporation of state binational companies, and its organizational and administrative plan will be agreed upon between the Parties, and will be built for strengthening their technical, financial capabilities and provision of resources, in such a way to permit to develop in each of the Parties the projects required for the use of the energy resources available in their respective countries, as well as for the infrastructure development, generation capacity , transport, and energy resources marketing.

The Gran National Company will enjoy the advantages that every State could offer in order to develop projects based upon the principles of solidarity and complementarity, more than upon the principles of competition and the free market.

In order to minimize the transaction costs, the Parties undertake that the negotiations will be between States in a way that the ALBA criteria prevail throughout the value chain of the company.

Article III

The present Treaty may be amended by the parties' will. The amendments or modifications will enter into force on the date defined by the Parties.

Article IV

The doubts and controversies that could emerge from the interpretation of the present Treaty will be resolved through direct negotiation between the Parties, using diplomatic channels.

Article V

The Department of the People's Power for Foreign Affairs of the Bolivarian Republic of Venezuela shall be the depository of the present Convention.

Article VI

As soon as the present Treaty enters into force, it shall be opened for accession by the States Parties of the Bolivarian Alternative for the Peoples of Our America, established under the Agreement for its Application, signed in the city of Havana, on December 14th, 2004.

Article VII

The present Treaty will enter into force on the date of the last notification through which the Parties shall communicate to the depository the fulfillment of their constitutional and legal internal formalities for that purpose and will remain in force for a ten(10)-year period, and it may be automatically extended for consecutive periods of five (5) years, unless one of the Parties notifies the depository in writing and the other Parties through diplomatic channel, its intention to denounce it, at least six (6) months prior to the expiry of the Treaty. The termination of the present Treaty will not affect the implementation of the programs and projects initiated during the period in which it is in force. They will continue up to their complete execution, unless the Parties agree otherwise.

Article VIII: Transitory

The Parties will submit within thirty (30) days the amendments and necessary supplements for their ratification according to the current legislations in every country.

Signed in the city of Barquisimeto, on the twenty-ninth (29) day of April of two thousand seven (2007, in three (3) original copies in the Castilian language, each text being equally authentic.

For the Government of the Bolivarian Republic of Venezuela

Hugo Chávez Frías, President of the Republic

For the Government of the Republic of Bolivia

Evo Morales, President of the Republic

For the Government of the Republic of Cuba

Carlos Lage, Vice-President of the Republic

For the Government of the Republic of Nicaragua

Daniel Ortega, President of the Republic