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.


But there have been many cooperative efforts and proposals to cooperate. 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. And in 2006, Venezuelan President Hugo Chavez met with Presidents Nestor Kirchner of Argentina and Lula da Silva of Brazil to discuss a natural-gas pipeline that would stretch from his country to Argentina. Neither pipeline had become a reality as of 2010 because of cost and logistical and environmental problems.


There have also been efforts to construct important pipelines within a country's borders. In 2004, 20 years after the Camisea natural-gas fields in the Peruvian department of Cuzco were discovered, President Alejandro Toledo inaugurated a pipeline that would bring the gas from the interior to Lima and the Pacific coast.


Natural gas will remain an important energy issue in South America for years to come, and we will continue to follow developments in NotiEn.


Carlos Navarro - Editor