Venezuela's Chavez calls for energy alliance

By Pav Jordan

SANTIAGO (Reuters) - Venezuelan President Hugo Chavez challenged Latin American leaders at a summit on Friday to lower regional oil prices, telling big producers to sell oil cheaply to their neighbors.

Addressing leaders by name, Chavez, a stalwart opponent of the United States, proposed the creation of a region-wide oil alliance that would help sustain booming economic growth by sharing energy resources. Venezuela is Latin America's second-biggest oil producer after Mexico.

"I propose to you that we unite, that we join together in mechanisms of cooperation with countries that don't have oil and who cannot afford to pay $100 per barrel," said Chavez, who has used Venezuela's oil wealth to spread his influence in the region. Oil prices reached record highs of more than $98 per barrel this week.

Leaders -- most of them leftist -- from Latin America, Portugal, Spain and Andorra are in Santiago for a three-day Ibero-American summit where energy has been high on the unofficial agenda.

Many Latin American economies have expanded rapidly in recent years and energy supplies have been stretched by booming consumer demand and factory output in countries such as Chile and Argentina.

Chavez and leftist allies in Bolivia and Ecuador have tightened state control over their energy industries and Bolivia, one of the poorest countries in the Western Hemisphere, recently forced Argentina and Brazil to pay more for its natural gas.

PARAGUAY PROJECT

The presidents of Brazil and Paraguay, Luiz Inacio Lula da Silva and Nicanor Duarte Frutos, met on Friday and agreed to build a $400 million power transmission line from the giant Itaipu power plant at the two countries' border to the Paraguayan capital, Asuncion.