NotiEn - A newsletter on Energy Policy issues in Latin America
April 29, 2010Vol 1, Issue 2
Natural Gas
An overview of South American Natural Gas...
 If there is any area where Andean countries enjoy a major energy advantage it is in natural gas. Two countries in particular, Bolivia and Peru, have vast reserves of natural gas and are in a position to supply their neighbors in South America, although Argentina and Venezuela also have some reserves available to export. 


 Natural gas has provided both a reason for unity and division among South American countries. There have been instances where countries have agreed to cooperate and others where a dispute over supply contracts has created conflicts among the supplier and the buyer. One of the milestone events occurred in 1999, when Bolivia and Brazil inaugurated a pipeline from Rio Grande, Bolivia, to the Brazilian cities of Sao Paulo and Porto Alegre.The pipeline opened a major opportunity for Bolivia to sell gas to Brazil.  Yet, the two countries have not always been in harmony over trade in gas.  Bolivia has at times suggested that Brazil was not paying a fair price for the gas. In 2007, after arduous negotiations, Bolivian President Evo Morales managed to obtain an agreement from Brazilian President Inacio Lula da Silva's government to pay more for Bolivian gas. 


There have been other conflicts over trade in gas over the years.  In 2006, Argentina decided to increase the price of its natural-gas exports, creating conflicts with its neighbors and in particularly Chile.  Argentina's price increase was in tune with a similar price hike implemented by Bolivia. And Chile has turned to alternative suppliers outside South America, especially Trinidad and Tobago.

Read more... 

Carlos Navarro - Editor

Bolivia & Brazil Inaugurate Gas Pipeline

In 1999, Bolivian President Hugo Banzer and Brazilian President Fernando Henrique Cardoso inaugurated Latin America's longest natural-gas pipeline Feb. 9.  The binational pipeline, completed at a cost of US$2 billion after decades of arduous negotiations, is considered crucial to developing Bolivia's mostly untapped gas reserves and to supplying the ever increasing energy demands of Brazilian industry. The Gasoducto Bolivia-Brasil links Bolivia's Andean gasfields with Brazil's industrial centers.  The pipeline runs from Rio Grande, 40 km from Santa Cruz de la Sierra, Bolivia, to several major Brazilian cities, including Sao Paulo and Porto Alegre. Read more...

Peru: Camisea Gas Pipeline Inaugurated after 20 years
In 2004, 20 years after the Camisea natural-gas fields in the Peruvian department of Cuzco were discovered, President Alejandro Toledo has inaugurated the pipeline that will bring the gas from the interior to Lima and the Pacific coast.  The president and his ministers say the revenues generated by the sale and distribution of gas will be an economic windfall for Peru and will revolutionize energy consumption for the country's citizens.  But as the Toledo government celebrates the pipeline opening as a historic moment in the economic life of Peru, environmental and indigenous groups say the project will do significant harm to the ecosystems it travels through and to the native peoples who live in them. Read more...

In This Issue...
A Note from the Editor
Bolivia & Brazil inaugurate gas pipeline
Peru: Camisea gas pipeline inaugurated after 20 years
Five southern cone countries from "Energy Ring" to integrate natural gas network
Argentina hikes prices on gas imported to Chile, Chile says argentine actions are "frustrating"
South American leaders propose massive transamazonian gas pipeline from Venezuela through Brazil and Argentina
Bolivia: Corruption and errors in petroleum contracts hinders nationalization of natural gas
Bolivia gets Brazil to agree to pay higher prices for natural gas
Chile strengthens natural-gas agreement with Trinidad and Tobago
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Five Southern Cone Countries Form "Energy Ring" to Integrate Natural Gas Network
South American Energy Ring
In 2005, countries in the Southern Cone Common Market (MERCOSUR) proposed an "energy ring" that would distribute natural gas through a gas line network that would connect five countries.  The project is slated to be completed by 2007 and represents an effort to alleviate the shortages of natural gas that have been aggravating citizens and businesses in the region.  Although Bolivia, the continent's second-largest holder of natural gas reserves, was not included in the energy ring, the government in La Paz made efforts to keep future partnerships open. The plan would build a 1,200 km gas pipeline from southern Peru to northern Chile, thus linking Peru's Camisea fields to a network that also includes Brazil, Argentina, and Uruguay.  At the time, the possibility was raised that Bolivia and Paraguay could connect to the ring in the future. Read more...

Argentina Hikes Prices on Gas Imported to Chile, Chile says Argentine Actions are "Frustrating"
The Argentine government's decision in 2006 to increase the price of the natural gas it exports to neighboring countries and to charge foreign motorists higher prices for gasoline strained its relations with the governments of those countries, especially Chile.  The trans-Andean relationship between the two countries has degraded since members of Chilean President Michelle Bachelet's Cabinet complained about the increases. The decision by Argentina to increase rates came after Bolivia increased the cost of gas it exports to Argentina. Read more...

South American Leaders Propose Massive Transamazonian Gas Pipeline from Venezuela through Brazil and Argentina
In 2006, Venezuelan President Hugo Chavez pledged to build a natural-gas pipeline that would stretch from his country to Argentina.  He has met with Argentine President Nestor Kirchner and Brazilian President Luiz Inacio Lula da Silva to begin a preliminary-planning process for the megapipeline, although energy-industry analysts have expressed doubts about the economic viability of such a gigantic project and environmental groups have fears that its construction would damage the Amazonian ecosystem. The project would run between 8,000 km and 10,000 km and would supposedly require an investment of US$20 billion, though cost estimates have varied widely. Read more...

Bolivia: Corruption and Errors in Petroleum Contracts Hinders Nationalization of Natural Gas

Bolivian President Evo Morales has reacted angrily to revelations in 2007 that there was corruption among members of his Movimiento al Socialismo (MAS) in the setup of contracts to extract the country's large natural-gas reserves.  Legislators from the conservative opposition party Poder Democratico y Social (Podemos) have been raising significant criticisms regarding errors in natural-gas contracts arranged by the Morales administration.  The controversy, which has bogged down the nationalization of Bolivia's natural-gas resources, led to the firing of the head of the state petroleum company. Read more...

Bolivia Gets Brazil to Agree to Pay Higher Prices for Natural Gas
Natural Gas Prices
In 2007, Bolivian President Evo Morales successfully negotiated a commitment from the Brazilian government to pay higher prices for the natural gas it imports from Bolivia. Negotiations had been a long-term strain between the two neighbors, with Brazil's state oil company Petroleo Brasileiro SA (Petrobras) seeking to maintain lower purchase rates as it bought Bolivia's ample natural-gas resources. The announcement of the higher price helped Morales somewhat in domestic politics, with his administration's party the Movimiento al Socialismo (MAS) facing corruption allegations and allegations of bungling negotiations of the gas-extraction contracts with foreign petroleum companies. Read more...

Chile Strengthens Natural-Gas Agreement with Trinidad and Tobago

Following the summit of Latin American and Caribbean countries in Quintana Roo Mexico, Chilean President Michelle Bachelet met with Prime Minister Patrick Manning in Port of Spain, Trinidad and Tobago, where the two leaders signed a memorandum of understanding to expand cooperation in the area of energy. They also discussed the possibility of negotiating a bilateral free-trade agreement (FTA).

Chile, which is a net importer of hydrocarbons, is attempting to diversify its sources of natural gas to compensate for Argentina's cuts in exports. In 2009, Chile completed the large-capacity Quintero storage terminal for liquefied natural gas (LNG), allowing an increase in imports from sources other than Argentina. "Trinidad and Tobago is a reliable supplier of energy resources," Bachelet said at a press conference in Port of Spain announcing a deal to expand LNG imports from the Caribbean country.

Read more... 

Energy Policy, Regulation and Dialogue in Latin America

NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program