South American gas pipeline deal to be signed soon

Jun 06, 2005 02:00 AM

Gas could flow throughout the system in 2007, Rodriguez said. The exact timing "depends a lot on the speed we can place on the political-legal accords and afterwards on the speed of the private investors ...," he added. "The physical part is very short," and a pipeline linking Camisea with Chile could be built within some 14 months.
And political will to make it happen fast exists between presidents Ricardo Lagos of Chile, Nestor Kirchner of Argentina and Luis Inacio Lula da Silva of Brazil, Rodriguez said.

Camisea would supply more than 30 mm cm to the gas link.
"It could be much more than that but that's what we've talked about to begin with," Rodriguez said. Plans also exist to export gas from Camisea to the US and Mexico.
Carrying out the integrated gas plan in South America's southern cone will be up to the private sector once the governments have set up an adequate legal framework, Rodriguez said. Total investment will be around $ 2.5 bn, with $ 400-$ 600 mm needed to build the pipeline linking Chile and Peru.

Beyond that, funds would go into adapting the existing pipeline between Chile and northern Argentina and the construction of a new pipeline link from Uruguaiana at the Argentina-Brazil border to the southern Brazilian city of Porto Alegre, which recently has faced gas shortages.
"This is about a group of pretty big investments that several companies will shoulder," Rodriguez said. Among them, Tractebel, a unit of French utility giant Suez, has said that it's studying a 1,150-kilometer pipeline that would stretch from Pisco, Peru, south to Tocopilla, Chile, and carry 23 mm cmpd of Peruvian gas, with 18 mm cmpd of that flow heading to Argentina. Tractebel will complete its study by the end of June, said Rodriguez.

Brazil's Mines and Energy Ministry said the Uruguiana-Porto Alegre pipeline is likely to be built by a consortium involving Petroleo Brasileiro. The Lagos administration has pushed for both greater integration of South America's energy sector and for greater diversification of Chile's sources of fuel and power.
In the recent past, both hydropower reserves and gas supply from Argentina have proven unreliable. Irrespective of the Peru deal, plans to enable Chile to import liquefied natural gas will continue, Rodriguez said.

Bolivia, home to South America's second-largest natural gas reserves behind Venezuela and linked via gas pipelines to both Argentina and Brazil, has meanwhile become engulfed in turmoil largely related to controversy over developing the resource.
"We'd like Bolivia to also participate in this Southern Cone energy grid, but regrettably this depends on them," Rodriguez said.

Despite an oil pipeline link with Chile, Bolivia refuses to supply its southwest neighbour with gas unless Chile gives Bolivia sovereign land access to the Pacific Ocean, which it lost in a late 19th-century war. Bolivia recently has also become an intensifying headache for Brazil and Argentina. The impoverished Andean country currently supplies Brazil with some 21 mm cmpd of gas, and has pledged to provide 7.7 mm cmpd of gas to Argentina this year.
Supplies from Bolivia to Brazil are slated to go up to 30 mm cmpd next year, and Bolivia also had signed a memorandum of understanding with Argentina last year to boost its supplies to Argentina to 20 mm cmpd once a new pipeline is built.

While the increase in the volume to Brazil may still go through, the Argentina supply increase has been put on ice as companies refuse to make any further investments in Bolivia after the country hiked its levies on gas production at the well-head to 50% from 38% in May.
Also, Bolivia has been shattered by deep divisions on energy policy, with protesters demanding an outright nationalization of the energy industry that is now mostly in the hands of foreign oil firms, such as Brazil's state-oil firm Petrobras, Spanish-Argentine Repsol-YPF, or France's Total.

With a deteriorating situation in Bolivia, its neighbours have been speeding up efforts to secure gas supplies elsewhere.
Brazil, which reckons to double its gas consumption to 78 mm cmpd by 2010, is planning a massive boost in its domestic gas output. And Argentina has just announced measures to give incentives for new exploration and production of natural gas in its territory.

Source: Dow Jones
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