Argentina will be top natural gas exporter In Latin America

Jan 12, 1998 01:00 AM

Argentina will become Latin America's leading natural gas exporter by early next century, despite its likely inability to make a huge amount of headway in the growing southeast Brazilian gas market. Rather, by 2015, western neighbour Chile will absorb nearly 1.06 bn cfpd of Argentine gas - roughly 70 % of its projected 1.48 bn cfpd of gas exports -- according to a study, conducted by Wood Mackenzie Global Energy Consultants.
Uruguay, with a population of about 3 mm, is expected to be importing 71 mm cfpd from Argentina through a planned 163-mile pipeline spanning the Rio de la Plata.
Brazil will take the remaining 318 mm cfpd of Argentine exports. Some will come through the planned 275-mile, 177 mm cfpd Gaucho pipeline connecting the Argentine province of Entre Rios with Uruguaiana, Brazil.
The rest is likely to be exported from Argentina's Northwest Basin by reversing the flow of the Yabog pipeline from Bolivia.
That will allow Argentine gas to be shipped north to supplement Bolivian exports along the planned Bolivia-Brazil pipeline, which will become the chief conduit for Brazil's natural gas imports
As initially envisioned, the line was intended to bring 285 mm cfpd of Bolivian gas to Brazil upon start-up in 1999, ramping up to 565 mm cfpd by 2006. But Petrobras last year asked Bolivia to increase exports to 1 bn cfpd by 2004.
"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," said the World Bank, one of several multilateral agencies funding the project.
However, many observers doubt Bolivia can prove up the 2.3 tcf in additional reserves it needs to meet the demand.
To solve Brazil's expected gas supply deficit, proposals have been aired to build a pipeline connecting Argentina's Northwest Basin directly with southeast Brazil.
Backers of the Mercosur pipeline plan include Mobil, Argentina's Petrolera San Jorge, Canada's Alberta Energy and Japan's Marubeni, which have set up a consortium to build the 1,938-mile, 883 mm cfpd line.
However, Wood Mackenzie concluded, Argentine production, "particularly from the Northwest Basin, will be pushed to the limit with the demands of the domestic market, exports to Chile and exports to Brazil through the Yabog line."
Wood Mackenzie assumes that Argentina will nearly double its 21.2 tcf of existing proven and probable gas reserves by 2015. But the total would have to rise above 50 tcf to justify the development of additional major export schemes like Mercosur, the report's principal author, Lynda Logan, told.
Furthermore, given the reforms under way in the Brazilian energy sector, a big leap in Brazilian gas production is possible.
In view of the uncertainties surrounding Brazil's import requirements, Argentina's ability to prove up reserves beyond expectations, and financing for the $ 1.5 pipeline, "it seems reasonable to assume that the Mercosur project will remain little more than an exercise in bravado for the companies involved," the report said.
Instead, Logan said, gas from Peru's 11 tcf Camisea field eventually could be linked to the Bolivia-Brazil pipeline, if the price is competitive with LNG or other energy sources.
If Mercosur doesn't go ahead, Argentina won't acquire more than 10 % of the Brazilian gas market by 2015, Wood Mackenzie said.

Source: not available
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