The Uruguayan energy sector is at thecrossroads. As in the case of many other countries, high oilprices in the international market are taking their toll onan economy which imports all of its oil and oil products.Uruguay has also depended, to a large extent, on import ofelectricity from Argentina to complement its supplies. Tradein electricity and natural gas collapsed during the economicrecession of 2001-02 and Argentina's crisis in the sameperiod, which, together with the rise of oil prices, havebrought to the fore questions of energy security (that is,ensuring sufficient, reliable and cost-effective supply ofnational energy demand) and the cost/risk trade-offsinvolved in depending on foreign suppliers. The Uruguayangovernment has rightly perceived this to be a fundamentaleconomic issue and sought to put together a strategy foraddressing it.