Bolivia-Brazil pipeline beginning of regional grid

Nov 20, 1996 01:00 AM

Economic and political reforms have brought a 3,000 km gas pipeline between Bolivia and Brazil's industrial heartland to the point of construction after 30 years on the drawing board. Financing negotiations for the $2 bn pipeline have already begun, marking a major step towards the creation of a regional gas grid linking Argentina, Chile, Bolivia, Paraguay, Brazil and possibly Peru all in a vast gas transmission system six countries of South America's southern cone. The rationale for the project has been obvious for decades -- huge energy demand growth combined with heavy pollution in Sao Paolo, and large gas reserves in Bolivia, Argentina and Peru.The project hinges on liberalisation of Brazil's electricity generation market and the privatisation of Bolivia's state oil company YPFB, for which bids close on December 5. The pipeline alone is expected to cost $2 bn, but its success hangs crucially on new exploration investment in Bolivia, on another $1.5-2 bn funding for Brazilian gas-fired power generators, and on $1 bn investment in gas distribution and industrial conversion over the next 10 years. The pipeline will have a 30 mmcmpd capacity, although only 8 mmcmpd is planned for the first year, rising to 16 mmcmpd over eight years.

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