1900 mile Mercosur gas duct

coming closerMar. 25, 1997 Brazil's Petrobras and Argentina's YPF were the absent partners recently when an international consortium presented a $ 1.5 billion plan to build a gas pipeline between the two countries. Officials from the consortium's four companies said the ambitious 1,900 mile (3,100 km) pipeline had good chances of becoming reality, but they also acknowledged success was more likely if Petrobras and YPF were involved. "We are waiting for those two major partners, YPF and Petrobras, and when they join and make the commitment, we are on our way," said Arun Dey, manager of the project, which is called "Mercosur Gas Pipeline" after the customs union between Argentina, Brazil, Paraguay and Uruguay. "YPF, Petrobras, other producers - they have to be included," Jorge Ferioli, president of Petrolera Argentina San Jorge, told. He added that there is contact with YPF and that "in a short time there will be news."
The consortium is headed by AEC Pipelines, a division of Canada's Alberta Energy Co, which has a 40 % stake, while Mobil and San Jorge have 25 % each and Japan's Marubeni has 10 %.
YPF will be crucial to the project because it sits on many of the Northwest Argentine gas reserves that will have to be extracted to meet the soaring demand for gas in Southeast Brazil that the group projects will make its plans profitable. Through its recent acquisition of Ampolex Argentine SA, Mobil is well placed to supply some of the gas. Mobil has an interest in the Northwest gas basin through Ampolex.
According to the feasibility study presented, Brazil's demand for gas from this pipeline would be 8.5 million cmpd in 2000 and would surge to 19.6 mm cmpd by 2005.
"This project is of national interest to Argentina, Brazil and Paraguay," said project manager Dey. Most of the gas carried through the pipeline will be sent to Brazil but it is also slated to supply gas to Paraguay's capital Asuncion and Argentine cities including Resistencia and Corrientes on its route.
Petrobras, meanwhile, will be key to success at the distribution end in Brazil. The Brazilian state-owned oil giant will be an important player when the consortium now launches into what it calls an "open season" for distributors to make long-term commitments for shipping through the pipeline. But there are formidable obstacles to what was initiated by a commission of Argentina's Northeast provincial governments in 1994 when it approached AEC Pipelines to carry out a feasibility study for a pipeline to Brazil.
The group needs to convince Petrobras that this pipeline will complement another pipeline the Brazilian company is involved in constructing from Bolivia to its home market. YPF also already has a deal with Argentina's Transportadora de Gas del Norte to supply 2.5 million cubic metres of gas to Brazil. In addition, the Brazilian, Argentine and Paraguayan authorities all have to give their go ahead. If all goes smoothly, construction should start late next year and be complete between 2000 and 2001.