All together now: Venezuela spearheads a Latin American oil consortium. But will anyone buy into it?

Huge crowds of demonstrators shut Bolivia down in October 2003 protesting a plan to pipe the nation's natural gas across the border to its traditional enemy, Chile. A key factor fueling their anger was the belief that huge multinational oil companies had imposed their terms on tiny Bolivia.

Now, Venezuela's President Hugo Chavez, a populist leader and harsh critic of capitalism and globalization, is cheerleading a plan to turn the tables on the world's big oil companies. He aspires to combine Latin America's state-run oil companies into a single, large, regional consortium named PetroAmerica. As Venezuelan officials envision it, PetroAmerica would stretch from the Rio Grande to Tierra del Fuego. If it succeeds, it would control 11.5% of the globe's crude oil reserves as well as vast stores of natural gas.

"This is something historic" Chavez said after the consortium's formal launch at a meeting with Argentinean President Nestor Kirchner last year. "It's a new way of political, economic and human integration." The plan meshes elegantly with Chavez's doctrine of regional sovereignty to counterbalance the United States' influence in the hemisphere. It

also reflects his admiration of South American revolutionary hero Simon Bolivar, who dreamed of uniting all of South America under a single republic.

Chavez's effort comes as high international oil prices give any such consortium bargaining power against the oil giants. It wouldn't be the first time he has sized them up. In October 2004, Chavez suddenly and unilaterally hiked the royalties charged to operators in Venezuela's Orinoco Belt, a source of heavy crude, to 16.6% from 1%. So far, none of the foreign investors has pulled out.

Meanwhile, Venezuelan officials have toured the continent, meeting with officials in Brazil, Paraguay, Argentina, Bolivia and Trinidad and Tobago to announce joint-venture projects. Argentina has been among the most enthusiastic of the potential partners, and in October 2004, Venezuela and Argentina opened a subsidiary of Venezuelan state oil company PDVSA, Interven Venezuela, in Buenos Aires. The two nations are the founding members of PetroSur, which is to be a building block of the potential PetroAmerica, along with Chavez's effort to reach out to Caribbean nations, PetroCaribe.

The Venezuelans say that Latin America's state-run oil companies should cooperate, not compete, exchanging skills and technology in order to invest their income in human development in this resource-rich but high-poverty region. They also argue that poor nations like Bolivia are often outmatched in negotiations with global oil companies. After meeting with Brazilian officials late last year, then-president of PDVSA Ali Rodriguez spoke of the "humiliation" of the 100 million Latin Americans surviving on less than US$1 per day. "President Hugo Chavez has launched the idea of PetroAmerica as a tool to combine the talents and resources of our nations to obtain the greatest benefits and as a force for the defense of our sovereignty," he said.

Venezuela's ambitions have struck a chord in some. "It's an interesting idea," says Paulo Totti, spokesman for Banco Nacional de Desenvolvimento Economico e Social, Brazil's state-owned development bank. "All integration is important ... but between the idea and the fact there's a lot of ground to cover."

The plan has been met by even sharper skepticism. "It is a political project to achieve hegemony over the region," says Albis Munoz, president of the national business federation, Fedecamaras. He doubts PetroAmerica will help Venezuela's economy at all.

Even in Bolivia there are doubters. Mauricio Galleguillos served as Bolivia's vice minister of hydrocarbons until March 2004 and now heads a committee reviewing the nation's privatization policies. "Here in Bolivia there are people who say that it isn't in our interests to marry a giant like Venezuela" Munoz says.

Bolivia has yet another complication. Nearly a decade after its privatization program, called capitalization, it has virtually no state oil company left. Since the fall of Gonzalo Sanchez de Lozada, who stepped down under pressure from the 2003 uprising, Bolivia has rewritten its hydrocarbons law giving the government more control. It is now negotiating to export the gas via a longer route across Peru.

Checkbook. PetroAmerica might be more about influence than economics. Roger Tissot, an energy policy analyst who follows Latin America for U.S. consultancy PFC Energy, says that Brazil's state-managed oil company Petrobras is run too much like a business and PDVSA too much like a checkbook for Chavez's social plans to work well together.

It's obvious why energy-hungry nations would want to ally themselves with oil-rich Venezuela, Tissot says, but it is less clear what Venezuela wants. Chavez has had a long-running antagonism with Washington, so he wants to use oil to buy support in the Organization of American States, Tissot says. "Countries want to do what they can to improve their standing on the world stage," he says. "And the only thing Venezuela has is oil."

MIKE CEASER * CARACAS