region have been undergoing substantial reorganization, including downsizing, demonopolization, and privatization. Although privatization is not the sole nor best answer to every nation's problems, it is being vigorously pursued by some important energy producers in the region. Following the drastic reforms carried out by YPF of Argentina, other state oil and gas companies -- such as Petroecuador, Petroperú, Ecopetrol, Petrotrin, and to a lesser extent Pemex and PDVSA -- have begun to reduce the scope of the state monopolies in their oil and gas industries or to decentralize the decision-making power within their organizations. The process of market-oriented reforms has proved to be painful and tortuous for many governments. Yet it is believed that reforms are the only way to revamp the inefficient and money-losing national energy entities in the face of stiff international competition.
Third, following the adoption by many governments of new policies to attract foreign investment, the investment climate has been improved in most if not all countries. Substantial investment is needed in all areas of the region's energy sector, and many countries are welcoming private domestic and foreign capital. Gone are the days when the governments of the region's major oil and gas producers shunned foreign investment in the exploration and production of national resources.
Fourth, regional cooperation has gained new momentum as the market has rapidly changed and developed in Latin America. During the 1990s regional cooperation has become more attractive than ever, with the development throughout the region of common interests and mutually beneficial trade and investment opportunities. Multilateral agreements to promote Western Hemisphere regional cooperation -- such as Mercosur, the San José Accord, and the North American Free Trade Agreement (NAFTA) -- involve not only the Latin American countries but also the United States and Canada. In addition, bilateral cooperation is essential for the successful development of the hydroenergy resources in the region.