3 September 2022 - 13:21
  • News Code: 461504
What Iran Has in Common with Uruguay and Nicaragua

TEHRAN (Shana) -- Latin America comprises 20 developing countries with a population of about 650 million people, maintaining good relations with Iran and seeking better ties. The region's economic size is significant, with Latin America's gross domestic product (GDP) estimated at $5 trillion by 2020. In terms of energy, about 20% of the world's oil reserves are located in this region which is considered a large market for international energy transactions. Some Latin American countries, including Venezuela, have significant oil reserves and are important oil producers. They also have large international oil companies such as PDVSA and Pemex, which operate in the global oil market and facilitate exchanges and joint ventures in the oil and gas industry. In general, the economic and energy indicators of this region indicate that there is great potential for development and the desire of the countries in this region to expand relations with non-US and European countries has provided good opportunities for development of ties with Iran.

Uruguay Energy Sector

As Uruguay's newly elected president, Luis Alberto Aparicio Alejandro Lacalle Pou, seeks to liberalize the country's energy sector as part of his ambitious reform agenda, plans have stalled in 2021 due to the political and economic implications of covid-19. His effective response to the coronavirus pandemic, coupled with high public satisfaction, has strengthened his political authority and he is expected to advance key parts of his policy agenda in the coming months.

Uruguay is a small, open economy with a strong dollar system and high participation of state-owned banks. The system has resisted the coronavirus pandemic in part because of widespread policy support by the authorities. Uruguay will see rapid economic growth in 2022 as it benefits from the normalization of economic activity and strong export growth driven by global demand for agricultural commodities. However, Russia's war Ukraine will push up commodity prices, especially fuel, causing inflation to remain above the Central Bank’s target range.

Labor unrest is likely to be due to lower real wages. Among the current strategies of this country in the framework of macro-prudential policy are action to counter the dollarization, crisis management arrangements and financial integration. The World Bank will also focus on the role of government and the prospect of further development of capital markets.

Uruguay’s Ministry of Industry, Energy and Mines oversees the energy sector through its National Energy Administration, with the exception of the Salto Grande hydroelectric complex shared by Uruguay and Argentina, which is under the direct management of the Ministry of Foreign Affairs.

The bulk of Uruguay’s oil imports are crude oil. The country's single refinery, Teja, has capacity to process 50,000 b/d. In 2020, the volume of crude oil reached 2 million tonnes, up from 0.5 million tonnes in 2017 when overhaul was effective. The country mainly imports oil from the United States (58%), Angola (26%) and Nigeria (13%). Argentina supplies Uruguayan gas needs.

Some key points with the energy sector in this country are as follows:

  • The country's energy policy aims to diversify the energy mix, reduce its dependence on oil and hydropower and improve energy efficiency. ANCAP is the main oil and gas company. The share of wind, biomass and solar in electricity generation has increased from 11% in 2010 to 64% in 2020. Energy prices are one of the highest in Latin America. For example, the final price of electricity for households in 2020 is $21.6 per kilowatt/hour under normal tariffs (-13% compared to 2019) and $11.6 per kilowatt/hour for the industry (-5%).
  • Biomass is the main source of energy with 43% of total energy consumption in 2020. Industry is the largest consumer of energy.
  • Uruguay is 100% dependent on fossil fuel imports.
  • In 2020, the share of renewable energy in the primary energy mix was 59%.

The average primary energy consumption per capita is 1.5 tonnes, which is about 3300 KWh in capacity (2020). Uruguay's total consumption increased by an average of 4.3% per year between 2010 and 2016 and has remained almost constant since then (5.2 million tonnes in 2020.). Biomass is the main source of energy in the total energy composition (43% in 2020 compared to 33% in 2010). Oil’s 2020 share was about 40 percent.

While there are natural gas-fired power plants in Uruguay, oil-fired power plants constitute the bulk of the country's thermal power supply. Rising costs for oil-fired power generation prompted the government to prioritize the diversification of Uruguay's electricity sector through the development of non-renewable hydropower and natural gas sources in its energy strategy for the years 2005-2030.

While the strategy has focused on successful renewables, Uruguay has sought to increase its reliance on gas-fired power generation. Given the recent development and uncertainty on the development of the liquefied natural gas import terminal in Uruguay, the forecast for its thermal power generation by 2030 is only the growth of oil-based electricity generation. As there are no specific plans for the new thermal power plants, it is expected that Uruguay's thermal energy capacity will remain below 1.2 GW by the end of the 10-year forecast period.

In many countries, the electricity sector has changed rapidly in recent years due to the growing penetration of variable wind and solar energy. At least nine countries generated more than 20 percent of their electricity generation from variable renewable energies in 2020: Denmark, Uruguay, Ireland, Germany, Greece, Spain, the United Kingdom, Portugal and, for the first time, Australia.

In 2017, Uruguay introduced its NDC after COP21. The goal is to reduce CO2-related greenhouse gas emissions by 24% by 2030 (compared to 1990) using domestic sources. The goal can be achieved with additional tools and increase up to 29%. In 2019, Uruguay committed to zero carbon by 2050. It is also predicted that its greenhouse gas emissions will be halved by 2025 compared to 1990 levels due to the widespread deployment of renewable energy sources.

Energy Cooperation

Finally, it is noteworthy that Iran's economic opportunities in Latin America are still unique and it is necessary for Iran to adopt foreign policy, especially in the economic field in the countries of the region with the intention of expanding relations.

Uruguay is devoid of fossil energy resources, and Iran could use the existing void in this country, in addition to energy exports, to invest in technology and technical and engineering services, and in light of the skilled and specialized workforce in Iran with training. Manpower in the country in the fields of technology and engineering, industry should be promoted and due to the creation of these conditions by investing in manpower in the long run, Iran’s influence in such countries will increase.

In addition to providing the raw materials needed in this country, there is enough room to invest in other sectors along with fossil and renewable energy, due to the existence of fertile lands in the agricultural and livestock sectors, and return on investment in this sector is guaranteed.


Nicaragua has a small economy with a GDP of $12 billion in 2021, but has grown by an average of 4% in recent years other than during the pandemic. Forecasts indicate that the previous growth trend will continue in the coming years. The population of the country is estimated at 6.6 million, which is a sign of small size, but on the other hand, the country has a young population. About half of the population is less than 25 years old.

Its economy is non-industrial and dependent on agricultural and livestock products. The country has been the main exporter of coffee to Iran in recent years, and Iran has mainly exported agricultural products and industrial printers to this country. Iran's trade with this country in 2020 totaled around $100,000.

Oil and gas reserves have not been discovered in Nicaragua but are better off in terms of other mineral resources such as gold, silver and copper. It has no oil or gas production. Nicaragua imports oil and petroleum products from the United States, Venezuela and Costa Rica. Consumption of its petroleum products is about 35,000 b/d, which is supplied through the country's only refinery and imports. The refining capacity of the refinery operated by Puma is about 20,000 barrels.

Currently, two important programs in the field of energy are being pursued: The Ministry of Energy and Mines has planned an electricity generation program (2013-2027) under the title of various scenarios of the country’s energy demand for electricity generation from renewable sources. The National Plan for Sustainable Electricity and Renewable Energy was also introduced in 2012 and is still being pursued. What is certain is that the country is more concerned with the development of renewable energy than with its emphasis on fossil fuels. As can be seen from the supply of various types of energy, supply from solar and wind sources has a higher growth than other sources, especially fossil fuels.

Oil and Gas

In recent years, oil exploration efforts have been made by the Norwegian oil company Equinor, as well as the Canadian company in Nicaragua, and contracts have been signed with these companies. Also in 2019, in order to encourage oil production, companies operating in the hydrocarbon sector were exempted from paying taxes under the new law.

Equinor has been exploring for oil offshore and is now leaving the country due to international pressure, and the Nicaraguan government is looking for a partner to develop the offshore oil industry.

The LNG import terminal (FSRU) is under construction to supply fuel for the power plant with a capacity of 420,000 tons per year and is in the final stages by New Fortress Energy and is scheduled for operation in 2022.

Due to the recent sanctions following the presidential election, the country's oil and gas projects have been hampered and international companies are under pressure to leave.


Appropriate economic growth, young population, lack of development of oil and gas industry and lack of capacity, government willingness to expand relations with non-US and European countries are the strengths of the country.


Long geographical distance, small economy, lack of development of internal structure of oil and gas industry, ‌ low consumption and import of oil and gas are the weaknesses of the country.


Existence of trade competitors close to Nicaragua, including Venezuela, focus on the development of renewable energy, interventions of major powers in the country are the threats in the countries.


The government’s willingness to develop the oil and gas industry, the presence of non-US and European oil and gas companies due to the unwillingness and impossibility of the presence of international companies due to sanctions, offshore oil development and construction of a refinery are the opportunities in the country.

Grounds for Energy Cooperation

  • Cooperation in the field of development and upgrading of the refinery and construction of a new refinery
  • Given the government's willingness to drill offshore, as well as the departure of the Equinor after several years of exploration operations and the unwillingness of international companies to work due to sanctions, there is an opportunity to take part in this sector.
  • The government is interested in building a refinery, and Venezuelan oil company PDVSA has announced its intention to do so. So there is an opportunity to work with the Venezuelan oil company to develop the refinery.
  • The Venezuelan oil company has a long history of operating in Nicaragua in the oil and refined products trade and investment, so cooperation and joint projects with this company in development projects will facilitate multilateral relations.
  • Existence of refining potential of oil-for-agricultural products trade

Source: Institute for International Energy Studies

Courtesy of Iran Petroleum

News Code 461504


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