Uruguay suffered through an economic crisis during 1999-2002, with average real gross domestic product (GDP) contraction of minus 4.7 percent per year during that period. Uruguay is a member of MERCOSUR, and its economy is highly integrated with those of its MERCOSUR partners; as a result, economic and financial instability in Brazil and Argentina, the two largest economies in MERCOSUR, was a prime cause of Uruguays economic troubles. In recent years, though, the economy has rebounded, with real GDP growth of 12.3 percent in 2004 and forecasted growth of 5.2 percent in 2005. A reduction in inflation, increasing world prices for Uruguays agricultural exports, revived economic growth in other MERCOSUR economies, and a $2.9 billion aid package from the International Monetary Fund (IMF) have all driven Uruguays economic recovery.
Uruguay has no proven oil reserves, so the country must rely upon imports for its oil consumption, which reached 35,700 barrels per day (bbl/d) in 2005. The country has a single oil refinery, the 50,000-bbl/d La Teja facility, near Montevideo. State-owned AdministraciÓn Nacional de Combustibles, Alcohol y Portland (ANCAP) controls Uruguays entire oil sector.
In recent months, Uruguay has increasingly looked towards Venezuela as the principle source of its oil imports. In August 2005, Venezuela agreed to supply Uruguay with up to 43,600 bbl/d of crude oil on preferential financing terms, allowing the country to pay in either cash or barter and delay payment on 25 percent of the crude oil for up to 25 years. In September 2005, ANCAP formed a joint committee with Venezuelas state-ownend oil company, PdVSA, to consider a $500 million plan to double the capacity of the La Teja refinery. The plan would also upgrade the facilities at the refinery so that it could handle heavier Venezuelan crude varieties.