Venezuela, Colombia and Panama launch construction of pipeline

Jul 10, 2006 02:00 AM

Venezuela started the construction of a $ 300 mm pipeline to transport gas and oil to Colombia and later to Panama. Venezuelan president Hugo Chavez, Colombia's President Alvaro Uribe and Panama's President Martin Torrijos were present at the first welding of the first segment of the pipeline from Maracaibo, Venezuela to Puerto Ballenas in Colombia.
The 225-km, 26-inch pipeline is expected to send 150 mm cf of natural gas (about 4.2 mm cm) per day for the first 4 years to Maracaibo to help with the short term lack of gas in western Venezuela. Later Venezuela will use the pipeline to send 250 mm cf of natural gas to Colombia and later to Panama with possibility to extend the pipeline to Costa Rica and use it to export hydrocarbons to Asia.

Chavez said it would allow Venezuela to substitute natural gas for more expensive diesel fuel, saving $ 30 mm a month. Construction is expected to take 10 months. Chavez described the pipeline as a very strategically important integration route linking the Caribbean to the Pacific Ocean.
“This natural gas pipeline is very important for Venezuela, very important for Colombia, and very important for the integration of the two nations,” Chavez said. "The axis that will be formed with this pipe... should be like a central nerve for the integration of Colombia and Venezuela," Chavez added.

"I've heard President Chavez describe his dream of gas, oil and energy integration many times... and it must become a reality," Uribe said.
"This gas pipeline is going to help the two countries. We also confide in the idea of integration with Panama. This way, we help each other advance on the integration of the countries," he added.

Venezuela produces around 6.3 bn cfpd of natural gas, most of which is used by the nation's oil industry operations, but it has Latin America's largest proven gas reserves estimated at 149 tcf (about 4.2 tcm) and is now in the first development stage of its natural gas resources.
The $ 336 mm project is financed by the Venezuela's oil company PdVSA. The construction of project is lead by PdVSA with the help of Colombia's oil company Ecopetrol.

Also, the three presidents signed a MoU on setting up a negotiating committee for promoting energy cooperation among the three nations.
The first stage of the project from Maracaibo to Puerto Ballena in Colombia is expected to be completed by next March. Venezuela is the world's No. 5 oil exporter, and a supplier to the US. It wants to reduce dependence on US energy markets for political and ideological reasons.

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