IDB and World Bank to finance Bolivia-Brazil pipeline

Dec 23, 1997 01:00 AM

A day after the Inter-American Development Bank (IDB) approved a 20 year, $ 240 million loan for the Brazilian section of the 1,966-mile Bolivia-Brazil natural gas pipeline, the World Bank has come with a 15 year, $ 130 mm loan for the same section.
The Brazilian portion is projected to cost more than $ 1.6 bn; the Bolivian side will cost about $ 450 mm.
Project shareholders, who financed the beginning of construction earlier this year, include U.S.-based El Paso Natural Gas Co., British Gas plc, and Australia's BHP Ltd., who together own 25 % of the Brazilian company created to transport the gas. The corresponding Bolivian company is privately owned with Shell and Enron Corp. as major shareholders.
The 32-inch-diameter line will run from Rio Grande, Bolivia, to Sao Paolo, Brazil. A 16-inch-diameter line will continue south to Porto Alegre, Brazil.
However, the World Bank said, "Given that current Bolivian reserves will not meet the export demands generated by the project, it is expected that the project will create a significant incentive for gas exploration in Bolivia. "
Demand by Petrobras will exceed known Bolivian supply by 2003, when the Brazilians would need 1.06 bn cfpd. Many companies are now exploring to find the additional 2.3 tcf that Bolivia will need to supply its neighbour over the 20 year life of the supply contract.
If that effort yields insufficient results, the next option may be gas exports from the northwest basin of Argentina. An existing pipeline permits Argentina to import gas from Bolivia; the pipeline flow could easily be reversed to ship Argentine gas north to Bolivia and then east to Brazil through the new Bolivia-Brazil line.
Local officials and companies also have proposed another project, dubbed the Mercosur pipeline, to connect the Argentine reserves directly with Brazil. The 30-inch-diameter-plus line would have a capacity at least as high as the Bolivia-Brazil line. With a hefty price tag, however, "we think it won't go ahead because the reserves don't justify it," Shaw said.
The idea of building a pipeline to connect to gas supplies from Peru's 11 tcf Camisea gas fields is a distant option.

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