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(Photo: AP / Javier Galeano)
photo: AP / Javier Galeano
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The Maya civilization flourished in Guatemala and surrounding regions during the first millennium A.D. After almost three centuries as a Spanish colony, Guatemala won its independence in 1821. During the second half of the 20th century, it experienced a variety of military and civilian governments, as well as a 36-year guerrilla war. In 1996, the government signed a peace agreement formally ending the conflict, which had left more than 100,000 people dead and had created some 1 million refugees.

Guatemala Map

Economy - overview:

Guatemala is the largest and most populous of the Central American countries with a GDP per capita roughly one-half that of Brazil, Argentina, and Chile. The agricultural sector accounts for about one-fourth of GDP, two-thirds of exports, and half of the labor force. Coffee, sugar, and bananas are the main products. The 1996 signing of peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, but widespread political violence and corruption scandals continue to dampen investor confidence. The distribution of income remains highly unequal with perhaps 75% of the population below the poverty line. Other ongoing challenges include increasing government revenues, negotiating further assistance from international donors, upgrading both government and private financial operations, curtailing drug trafficking, and narrowing the trade deficit.

GDP (purchasing power parity): $62.97 billion (2005 est.)

GDP (official exchange rate): $27.58 billion (2005 est.)

GDP - real growth rate: 3.1% (2005 est.)

GDP - per capita (PPP): $5,200 (2005 est.)

GDP - composition by sector:
agriculture: 22.8% industry: 19.1%
services: 58.1% (2005 est.)

Labor force: 3.76 million (2005 est.)

Labor force - by occupation: agriculture 50%, industry 15%, services 35% (1999 est.)

Unemployment rate: 7.5% (2003 est.)

Population below poverty line: 75% (2004 est.)

Household income or consumption by percentage share:
lowest 10%: 1.6%
highest 10%: 46% (1998)

Distribution of family income - Gini index: 48.3 (2000)

Inflation rate (consumer prices): 9.1% (2005 est.)

Investment (gross fixed): 15.5% of GDP (2005 est.)

revenues: $3.374 billion
expenditures: $4.041 billion; including capital expenditures of $750 million (2005 est.)

Public debt: 26.9% of GDP (2005 est.)

Agriculture - products:
sugarcane, corn, bananas, coffee, beans, cardamom; cattle, sheep, pigs, chickens

sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber, tourism

Industrial production growth rate: 4.1% (1999)

Electricity - production: 6.898 billion kWh (2003)

Electricity - consumption: 6.025 billion kWh (2003)

Electricity - exports: 425 million kWh (2003)

Electricity - imports: 35 million kWh (2003)

Oil - production: 22,300 bbl/day (2005 est.)

Oil - consumption: 66,000 bbl/day (2003 est.)

Oil - exports:

Oil - imports: NA bbl/day

Oil - proved reserves: 263 million bbl (1 January 2002)

Natural gas - production: 0 cu m (2003 est.)

Natural gas - consumption: 0 cu m (2003 est.)

Natural gas - proved reserves: 3.087 billion cu m (1 January 2002)

Current account balance: -$1.236 billion (2005 est.)

Exports: $3.94 billion f.o.b. (2005 est.)

Exports - commodities:
coffee, sugar, petroleum, apparel, bananas, fruits and vegetables, cardamom

Exports - partners: US 53%, El Salvador 11.4%, Honduras 7.1%, Mexico 4.1% (2004)

Imports: $7.744 billion f.o.b. (2005 est.)

Imports - commodities:
fuels, machinery and transport equipment, construction materials, grain, fertilizers, electricity

Imports - partners:
US 34%, Mexico 8.1%, South Korea 6.8%, China 6.6%, Japan 4.4% (2004)

Reserves of foreign exchange and gold: $3.764 billion (2005 est.)

Debt - external: $5.503 billion (2005 est.)

Economic aid - recipient: $250 million (2000 est.)

Currency (code): quetzal (GTQ), US dollar (USD), others allowed

Exchange rates:
quetzales per US dollar - 7.6339 (2005), 7.9465 (2004), 7.9409 (2003), 7.8217 (2002), 7.8586 (2001)

Fiscal year: calendar year

Regional Indicators: Central America

Although Central America (including Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama) has limited energy resources, it is important to world energy markets as a transit center for oil (via the Panama Canal), and as a potential energy transit center between North and South America.

Note: This information is latest available as of August 2002, and can change.

Central America is home to some of the world's poorest and most densely populated nations. According to the United States Agency for International Development (USAID), over half of the region's population lives in rural areas, and as many as two-thirds survive on less than $2 per day. Agriculture and manufacturing for export constitute major components of many Central American economies. Accordingly, the year 2001 was a particularly bad one for most Central American states, as their major trading partner, the United States, suffered an economic slowdown, and world coffee prices reached their lowest levels (when adjusted for inflation) in 100 years.

After spending most of the early 1990s recovering from authoritarian rule or civil wars in Guatemala, El Salvador, Nicaragua and Panama, the Central American countries have begun efforts to improve their economies through regional integration. In May 2000, after four years of negotiations, the three "northern triangle" countries (El Salvador, Guatemala, and Honduras) signed a free trade agreement with Mexico. The "northern triangle" countries are also reportedly negotiating a trade agreement with the Andean Community (Bolivia, Colombia, Ecuador, Peru, and Venezuela). The governments of El Salvador, Guatemala, Honduras, and Nicaragua are also developing plans for a customs union to be implemented begining in January 2004. The final negotations to interconnect the electricity networks of six Central American countries was signed in December of 2001, allowing for regional power trading amongst the member states begining in 2006 (see below). Economic improvement and regional integration, however, are threatened by frequent natural disasters (such as 1998's Hurricane Mitch), environmental degradation, drug trafficking, and persistent border tensions.

All seven Central American countries rely heavily on imported petroleum and indigenous hydropower to meet domestic energy demand. Imported petroleum comes primarily from Venezuela and Mexico under the terms of the San Jose Pact and the Caracas Energy Accord. The region consumes no natural gas and very little coal. Historically, hydroelectric power has dominated Central America's electricity sector. However, since opening up to foreign investors in the middle to late 1990s, the use thermal generation has grown rapidly.

Oil Production
Central America produces small volumes of crude oil, most of which is either sent to theUnited States for refining or consumed domestically. Guatemala, Central America's largest oil producer, produced approximately 19 thousand barrels per day (bbl/d) day in 2001. Panama, the region's only other producer, produced 1,000 bbl/d in 2001.

Guatemala's 526 million barrels of proven oil reserves are located primarily in the country's northern jungles of the Peten basin, and are most likely associated with those in Mexico's Tabasco formation. For much of the twentieth century, civil war precluded the development of Guatemala's hydrocarbon resources. Since the cessation of violence, marked officially by the signing of a peace treaty in 1996, the government of Guatemala has been opening areas for bidding and granting concessions for oil exploration. Oil production has increased dramatically, peaking at 21,000 barrels per day in the year 2000. In 2001, production settled slightly lower at about 19,000 bbl/d (see graph).

Since Guatemala's oil industry was first opened to foreign investors, one vertically integrated firm has consistently dominated the industry. As of September 2001, the European exploration firm Perenco has controlled oil production in Guatemala. In September 2001, Perenco purchased Basic Resources International, a wholly owned subsidiary of Andarko Petroleum Corporation. The sale included all of the country's existing oil fields, a 275-mile crude oil pipeline, a 2,000-bbl/d mini refinery, as well as storage and loading facilities. Perenco expects to boost production from its newly acquired Guatemalan assets to 25,000 bbl/d.

Efforts are also underway to explore and exploit potential reserves near Lake Izabal, Guatemala's largest lake, located in eastern Guatemala near the Gulf of Honduras. In 2001, the government approved two exploration contracts in two adjacent blocks located near the lake. In May 2002, however, Guatemalan President Alfonso Portillo cancelled one of the contracts amidst strong pressure from environmental groups (see Environmental Report). The second contract still stands, yet faces similar opposition on environmental grounds. The government reportedly is preparing more blocks across the country for exploration in the near future.

In July 2002, Nicaraguan President Enrique Bolanos announced legislation opening the country to foreign oil exploration. The announcement includes onshore concessions, as well as offshore blocks in the Atlantic and Pacific Oceans. Bidding is scheduled to begin in October 2002, and the winner is to be announced in early 2003. The announcement marks the first time Nicaraguan hydrocarbon resources have been opened to foreign development since the Sandinistas began their 11-year hold on power in 1979. Colombia and Honduras claim that portions of the 44,000 square miles of the Caribbean that Nicaragua is offering actually belong to them.

Oil Consumption
Oil consumption in Central America has doubled since 1980, reaching 244,000 bbl/d in 2000, making the region's total consumption levels roughly comparable to those of Chile (245,000 bbl/d) and Hong Kong (254,000 bbl/d). It is important to note however, that Central America's population is over twice that of Chile's and six times larger than Hong Kong's. The Central American economies are still among the world's poorest, and significant portions of the population live without access to electricity.

Oil is supplied primarily by Mexico and Venezuela under the auspices of the San Jose Pact and the Caracas Energy Accord. The San Jose Pact, originally implemented in 1980 and renewed annually, commits Venezuela and Mexico to provide all seven Central American countries and four Caribbean countries with a total of 160,000 bbl/d of crude oil and petroleum products under preferential terms. Under the Caracas Energy Accord, agreed to in October of 2000, Venezuela agreed to supply additional oil to Central American and Caribbean countries at preferential prices and terms for the next 15 years. In 2000, petroleum consumption accounted for approximately 70% of total energy consumption in Central America.

Natural Gas
Currently, Central America consumes no natural gas. In December 1999, however, Guatemala and Mexico signed a protocol agreeing to construct a natural gas pipeline from Ciudad Pemex, in southern Mexico, to the southern Guatemalan city of Escuintla. The 347-mile, $450 million line would follow the path of an existing oil pipeline in Guatemala's Peten jungle region, and the gas would be used both for industry and electricity generation. Initial demand is estimated at about 40 million cubic feet per day (MMcf/d). The pipeline, which is expected to be completed by 2004, could eventually be extended to the Honduran and Salvadoran borders, and possibly Nicaragua and Costa Rica as well, as part of a wider Central America gas pipeline network.

At present, Central America's main importance from an energy perspective is as a transit center for oil shipments via the Panama Canal. In 2001, approximately 613,000 bbl/d of crude oil and petroleum products passed through the Panama Canal, with around 57% of total oil shipments moving south from the Atlantic to the Pacific, and oil products dominating southbound traffic. Crude oil accounted for the majority of northbound oil from the Pacific to the Atlantic. In accordance with the September 1977 Panama Canal Treaty, Panama assumed full responsibility for the Canal at noon on December 31, 1999. At that time, the U.S. Panama Canal Commission was replaced by a new Panamanian entity, the Panama Canal Authority. The Treaty guarantees permanent neutrality of the Canal. In 1999, U.S. crude oil imports transiting the Panama Canal averaged 78,670 bbl/d.

Electricity generation in Central America has historically been dominated by hydropower. The privatization of energy markets, and the entry of foreign investors beginning in the late 1990s, however, has allowed for the development of numerous new thermal (mainly oil) generation plants. As a result, the role of thermal generation is growing rapidly at the expense of hydropower. As a share of regional electricity consumption, hydropower has fallen from 80% in 1980, to approximately 60% in 2000. (see graph)

Since 1996, Central America has been discussing plans to link the region's electricity grids. The Sistema de Interconexion Electrica para America Central (SIEPAC) project entails the construction of transmission lines connecting 37 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala. SIEPAC will cost an estimated $320 million and is schedule for completion in 2006. (see below)

Belize is highly dependent on electricity imported from Mexico to meet domestic demand. Besides the approximately 50% of electric power that is purchased from Mexico, another 30% comes from Belize's Mollejon dam, and the final 20% from the country's thermal plants. A project is underway in Belize to build a new dam, Chalillo, upstream from the Mollejon dam on the Macal river. Chalillo will have a capacity of 7 megawatts (MW), and will also store water upstream to be fed into Mollejon during the dry season, thereby increasing production at Mollejon as well. The project has garnered significant international attention from environmental groups. A case against the project is currently pending at the Belizean Supreme Court (see Environmental Report).

Costa Rica
Nearly 90% of Costa Rica's electricity is generated by hydroelectric plants. The country's electricity sector is dominated by the state-owned electricity monopoly, Instituto Costarricense de Electricidad (ICE), which provides 97% of the country's electricity. A subsidiary of ICE, Compa��a Nacional de Fuerza y Luz, S.A., (CNFL) handles distribution.

ICE estimates that Costa Rican electricity demand will grow by approximately 5.7% annually through 2020, necessitating an investment of $3 billion by 2011. Numerous new hydropower plants are being developed, including the 39-MW Brasil II plant on the Virilla River, and the 128-MW Pirris plant, located on the Pirris River in San Jose province. The Pirris hydroelectric plant is expected to enter service in 2005. CNFL is also developing the $3.6 million, 3-MW, Rio Azul waste-to-energy plant in San Jose.

El Salvador
El Salvador is Central America's largest consumer of geothermal energy. The country has two main geothermal facilities, Ahuachapan, with a generating capacity of 95 MW located in the Ahuachapan province, and Berlin, with a generating capacity of 66 MW, located in the province of Usulutan. In 2000, the country produced about 0.8 billion kilowatthours (Bkwh) of geothermal electricity, representing approximately 20% of total electricity consumption. Thermal generation and hydropower also play significant roles.

El Salavador began privatizing the electricity distribution in 1996. Since 1996, state assets have been broken into four restructured companies, each serving different parts of the country. The country's state-owned geothermal generating company, Gesal, is currently looking for a private partner to develop two new smaller geothermal projects near Ahuachapan and Berlin, which could potentially add approximately 40 MW to the country's capacity.

Since 1998, Guatemala has had the highest rates of thermal power consumption in Central America. Guatemala has Central America's largest coal-fired power plant, the San Jose Power Station, which was completed in 1999. Numerous other thermal power plants are planned, including the DECASA consortium's 300 MW, $450 million, petroleum coke power plant that is scheduled to come online partially in 2003, as well as Duke Energy's 165-MW heavy fuel oil plant to be completed by November 2002.

Honduras is the only country in Central America that is a self-sufficient electricity producer. 62% of the country's installed electric capacity in 2000 was hydropower, most of this coming from the 300 MW El Cajon hydroelectric dam as well as the 290-MW Rio Lindo/Yojoa facility.

Although it is estimated that only 50% of Hondurans have access to electricity, demand for electricity has been growing rapidly in recent years, reaching 10% annually before 1998's hurricane Mitch disrupted the country's economy. Parliamentarians have been pushing the central government to call for bids from private companies to construct another 200-MW hydroelectric project in Honduras.

Nicaragua's electricity sector is heavily dependent on imported petroleum. In 2001, the country spent approximately $176 million (7% of GDP) on petroleum imports. 71% of the country's 1999 electricity generation came from thermal power.

Beginning in the fall of 2000, Nicaragua put six power generators up for sale under the auspices of the state privatization agency, URE. Four of the six plants have been sold to Coastal Power (U.S.), including two 50-MW hydroelectric dams, a 100-MW fossil plant, and a 15-MW gas plant. The final two unsold fossil plants are the country's oldest.

Electricity generation accounts for most of Panama's domestic energy production, with hydroelectric generation alone accounting for 75% of the country's total energy production.

There are currently eight electricity generators and three distributors operating in Panama. Transmission remains in the hands of the government through the publicly owned Etesa company. Electricity demand is expected to grow significantly in the coming few years, and new projects are planned to help meet this demand. Construction of AES's $200 million, 132-MW Esti hydroelectric project in Panama's Chiriqui province began in early August 2000. Esti is made up of two hydroelectric plants, Guasquitas and Canjilones, on the Chiriqui river. In November 2001, Empresa de Distribucion Electrica Metro-Oeste Chiriqui (Edemet-Edechi) the Panamanian subsidiary of Union Fenosa (Spain) announced plans to invest $90 million over the next 10 years in hydroelectric and wind energy projects. The project will begin with a new 30-MW wind plant in the Chiriqui province.

Central American countries have been discussing plans to link the region's electricity grids. The Sistema de Interconexion Electrica para America Central (SIEPAC) project entails the construction of transmission lines connecting 37 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala. The SIEPAC project was formally approved by the participating governments in 1996.

In April 2002, a transmission line between Honduras and El Salvador was opened, marking the complete interconnection of all six SIEPAC countries. Prior to the Honduras-El Salvador link, Guatemala and El Salvador were not connected to the Honduras-Nicaragua-Costa Rica-Panama network of bilateral linkages. Endesa (Spain) is currently planning a high-voltage, 230-kilovolt (kV), 1,140-mile transmission line that will extend from Guatemala to Panama with connections to the grids and substations of all of the member countries (see map). This overarching power line is designed to mitigate the poor quality of existing interconnections, making regional transactions possible.

The project will be governed by two new regional institutions, the Regional Electric Interconnection Commission (CRIE) which will regulate the wholesale market, and the Regional Operating Agency, which acts as administrator of regional power transactions.

SIEPAC will allow the member countries to trade electricity regionally. It will also allow countries with severe electricity deficits to purchase power from their neighbors, as well as enabling countries dependent on thermal power to have access to Central America's abundant hydropower. Interconnecting the country's electricity grids might also make possible the introduction of natural gas into the regional fuel mix, capitalizing upon the proximity of neighboring natural gas producers Mexico, Colombia, and Venezuela.

Central America remains one of the poorest regions on earth; a fact which has led to massive exploitation of the area's natural resource base. Large areas of forest have been cut down and burned for firewood or used in the production of paper, while significant portions of land have been cleared for agricultural use. Oil exploration activities in certain parts of Guatemala, such as the northern Peten rainforest region, have encouraged road construction, accelerating the clearing of land and forested areas. These activities have lead to large-scale erosion and soil loss, leaving many areas vulnerable to flash floods and mudslides as the natural landscape's ability to retain water is jeopardized. Oil is the chief source of energy in most areas of Central America, and pollution from cars, industry, and power generation is a major problem in several areas.

*Includes crude oil, natural gas plant liquids, other liquids, and refinery processing gain.
Sources: Energy Information Administration, International Energy Annual 2000; and Oil and Gas Journal, 1/010/02.

Sources for this report include: AP Worldstream; BBC Summary of World Broadcasts; Business News Americas; Business Wire; CIA World Factbook 2001; Coal Week International; Dow Jones Newswires; DRI-WEFA Latin America Economic Outlook; Economist Intelligence Unit (EIU) Viewswire; EFE News Service; EIU ViewsWire; El Mundo; Financial Times; Global Power Report; Hart's Deepwater International; Independent Energy; International Market Insight Reports; International Monetary Fund; Inter Press Service; International Water Power and Dam Construction; Janet Matthews Information Services (Quest Economic Database); Latin America Monitor; New York Times; Offshore; Oil and Gas Journal; Oil Daily; Petroleum Economist; Petroleum Intelligence Weekly; Pipe Line and Gas Industry; Platt's Oilgram News; Power Engineering International; PR Newswire; U.S. Energy Information Administration; Water Power and Dam Consruction; World Oil.

For more information from EIA on Central America, please see:
International Energy Data Base

For more information on Central America, see these other U.S. government sites:
U.S. State Department -- Bureau of Western Hemisphere Affairs
International Trade Administration -- Country Commercial Guides
U.S. Department of Energy's Office of Fossil Energy's Western Hemisphere section
U.S. Department of State Background Notes: Western Hemisphere
FY 2001 Country Commercial Guides: Latin America & Caribbean
2001 CIA World Factbook

The following links are provided solely as a service to our customers and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the U.S. Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

Inter-American Development Bank
Foreign Embassies in Washington, D.C.
Organization of American States (OAS)
Political Database of the Americas
LANIC -- University of Texas
LatinWorld's section on Central America
The Latin American Integration Association (ALADI)
ARPEL, Regional Association of Oil and Natural Gas Companies in Latin America and the Caribbean
The Economic Commission for Latin America and the Caribbean (ECLAC)
Latin American Gas online news
International Newspapers Online: Central America
LANIC, Latin American Network Information Center, Central American nations
Summit of the Americas Information Network
SICE Foreign Trade Information System
Grupo ICE (Costa Rica's state electric company)
Central Bank of Guatemala
Central American Bank for Economic Integration