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Chavez Helps Drawing Grandiose Plans for Brazil and South America

The presidents of Brazil, Argentina and oil-rich Venezuela decided together on Thursday, January 19, to push ahead with a Pharaonic project for a north-south continental gas pipeline seen as crucial to increased South American unity.

Agreement to move forward on building the conduit, which would extend some 8,000 kilometers (nearly 5,000 miles), came in a meeting President Luiz Inácio Lula da Silva hosted at his official residence, in Brazilian capital Brasí­lia, with Argentina’s Nestor Kirchner and Venezuela’s Hugo Chavez.

"The political decision is made," said Chavez, the only one of the three leaders to address reporters after the gathering.

The idea emerged from talks Lula, Chavez and Kirchner held last month on the sidelines of a summit of the Mercosur trade bloc in Montevideo, and the Venezuelan President said that work could begin on the pipeline as early as this year.

Chavez said the three heads of state will meet again next month in the Argentine city of Mendoza before traveling on to Santiago for the March 11 inauguration of Michelle Bachelet as President of Chile.

In Mendoza, Chavez said, he and his colleagues will review the first technical studies with an eye toward formally presenting the project to the public at a midyear event in Venezuela.

What Lula, Kirchner and Chavez dubbed the "great gas pipeline of the south" is intended to begin in southern Venezuela and traverse Brazil on the way to a terminal in northern Argentina, though the exact route has yet to be determined.

Chavez’s ultimate goal is to pump Venezuela’s average daily output of roughly 100 million cubic meters of natural gas – enough to supply almost all of South America – through a network of pipelines spanning the continent.

He said Thursday that he, Lula and Kirchner decided to invite all other countries in the region to take part in a broader initiative which envisions tapping the smaller but still significant gas reserves of Bolivia, Brazil, Argentina and Peru to achieve "energy independence" for South America.

The voluble Venezuelan President said the proposed web of pipelines will be accompanied by industrial projects to expand and diversify the use of natural gas.

Chavez urged setting a target of having the majority of vehicles in South America run on natural gas by the year 2020.

He denied that the prospective great southern pipeline represents an attempt to steal markets from Bolivia, which currently supplies natural gas to Brazil, Argentina and Uruguay.

"It’s not a competing project, but a complementary one," Chavez said, asserting that South America has sufficient gas reserves "for the next 300 years," and touting the potential savings from reducing dependence on oil.

Venezuelan Energy Minister Rafael Ramirez said last week that the proposed southern pipeline would cost roughly $20 billion and could be completed in five to seven years.

Chavez told reporters that he and his counterparts also discussed matters related to Mercosur, a trade bloc that comprises Argentina, Brazil, Paraguay and Uruguay and which Venezuela is in the process of joining.

He said they talked about creating a "Bank of the South" as a regional alternative to the IMF and World Bank, and that they agreed to draw up a program for "immediate aid" to Bolivia, the continent’s poorest nation.

Chavez said that he, Lula and Kirchner will put proposals on the table when they travel to La Paz for Sunday’s inauguration of leftist Evo Morales as Bolivia’s first Indian President.

The Venezuelan said his government will offer to provide Bolivia with asphalt for highway construction, while Argentina is prepared to supply medicines and vaccines to its Andean neighbor and Brazil will make low-interest loans available to La Paz.

Mercopress – www.mercopress.com

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  • Guest

    You guys write too much
    Billions and Billions. Bullshit

    Question: How many Billions will go Swiss banks pocketed by you all know who.

  • Guest

    Another view…….with probable outcome
    But oil industry experts say their show of brotherhood may backfire if this expensive pipe dream becomes reality, since the network could turn the continent’s neighbors against each other as they compete for clients.

    In Brasilia on Thursday, the presidents of Brazil, Argentina and Venezuela discussed plans for a 5,000-mile pipeline from Caracas to Buenos Aires through Brazil’s Amazon rain forest, complete with links to Bolivia, Paraguay and Uruguay.

    “This pipeline is vital for us,” Venezuelan President Hugo Chavez said Thursday in Brasilia. He said that Venezuela and Bolivia “have gas for 200 years” and can supply fuel to Brazil and Argentina, where demand is increasing for power generation, cooking gas and cars. It also would distance the region from the U.S.-backed free market policies known as the Washington Consensus.

    The pipeline, which would cost $20 billion and could be built within five to seven years, “is the beginning of the South American consensus,” Chavez said. The leaders also agreed to meet in Argentina in March to review plans being prepared by their respective state-owned oil companies.

    But the pipeline could put Bolivia and Venezuela on an economic collision course, because Bolivia is already the biggest exporter of gas to Brazil and wants to increase exports to Argentina through another, much shorter, proposed pipeline.

    By joining the much larger pipeline, Bolivia “would be tying their production prospects to whatever Chavez wants to dictate,” said Andres Stepkowski, a Bolivia-based oil industry consultant.

    Chavez said the nations don’t want to compete, adding he believes there isn’t “any fear in Bolivia, rather there’s joy that this project is going to integrate us all, you wait and see.”

    Bolivia already lost a big export opportunity with the failure of a multibillion dollar plan to build a pipeline over the Andes to a Pacific Ocean port in Chile, where the gas would be liquefied for shipment to Mexico and Southern California.

    Bolivian president-elect Evo Morales, who will be inaugurated Sunday, helped lead a rebellion against that plan in an uprising that ousted Bolivian President Gonzalo Sanchez de Lozada and killed 60 people.

    The chief complaint was a long-standing cross-border conflict: many Bolivians still seethe over the 19th century war with Chile that left them landlocked. San Diego-based Sempra Energy then turned to Indonesia as its supplier.

    But Bolivia’s vice president-elect, Alvaro Garcia Linera, said the new Bolivian administration wants to negotiate for a pipeline to reach Pacific Rim clients through Peru. That route would be politically palatable because of good relations between Bolivia and Peru, and the pipeline could also supply destitute Indian communities in Bolivia’s highlands where gas is scarce.

    But Bolivia may be too late – Peru is already tapping its own gas fields in the Andes, and hopes to start shipments from a gas liquification plant in 2009.

    If a Bolivia-Peru pipeline is ever built, the two nations “would be fighting for the same markets, Mexico and the United States,” said Pietro Pitts, editor-in-chief for the Venezuela-based LatinPetroleum.com.

    In keeping with Chavez’s socialist vision of reducing America’s “imperialist” political and economic influence, the larger pipeline would be built and operated by Venezuela’s state company, Petroleos de Venezuela SA, and Brazil’s state-owned petroleum company, Petroleo Brasileiro SA.

    Chavez said each country would pay a share of the construction cost, with Venezuela’s amount reaching “several billions of dollars,” though the exact amount will not be determined until the March summit in Argentina. However, he suggested that the nations would not pay the full bill and that outside investment would be needed.

    Some Chinese companies he did not name have already expressed interest, Chavez said, and he predicted additional investment won’t be hard to find. The project could pay for itself five to eight years after being completed, he said.

    But the technological challenges of building a pipeline through the Amazon – not to mention environmental concerns – could push the cost to as much as $40 billion, according to industry experts.

    “You try building a pipeline through that mud – it can be done, but the price would be so outrageous no project can live with it,” Stepkowski said.

    Chavez dismissed that notion, saying Russia managed to build a pipeline stretching thousands of miles to Europe.

    But Brazil may be reluctant to invest heavily, having just committed this month to spend $18 billion to reduce its own dependence on imported gas by developing vast fields off its southeastern coast.

    Cost also would inhibit a Bolivia-Peru pipeline. Bolivia’s state-owned oil company has been cash-strapped since its industry was privatized in the 1990s, and the foreign companies that took over have mostly frozen their investments due to political uncertainty.

    Morales claimed during his campaign that Bolivia’s gas wealth had been looted by privatization, and vowed to nationalize the industry. He’s softened his tone since his landslide election, but experts say it may take six months before the investment climate becomes clearer.

    Companies who were behind the plan to ship Bolivian gas to Chile – Britain’s BG Group PLC; Britain’s BP PLC through its 60 percent ownership Pan American Energy; and the Spanish-Argentine Repsol YPF SA – declined comment on whether they would be interested in financing a Bolivia-Peru pipeline.

    If anything, it will probably take years of planning to determine whether the pipelines are ever built, said Larry Chorn, a petroleum engineering professor at the Colorado School of Mines.

    “Getting the contract, financing and construction aligned is not a trivial effort,” he said. “The entire sequence often requires four to six years before ground breaking.”

  • Guest

    Chavez is changing his mind…daily !
    The same as Lula and Kirchner !

    – Original project 2 months ago :
    pipeline 8000 kms, production 100 millions m3 daily, cost US$ 10 billions.

    – 2 weeks ago the same project :
    8000 kms, 100 millions m3 per day, cost US$ 17 to 20 billions.

    – YESTERDAY the same project :
    10000 kms, 150 millions m3 per day, cost
    US$ 17 to 25 billions

    – TODAY the same project :
    8000 kms, 100 millions m3 daily, cost around US$ 20 billions.

    Some industry specialists say that at US$ 17 billions, the project cannot and will not be profitable. So it is anyone guess how profitable it will be with a cost of anything between 17 to 25 billions US$.
    The project cost has already doubled in 2 months. Wait and see the new cost figure in 1 year ! smile.
    It could be anything between 30 to 50 billions, after more accurate studies.

    This trio should take some pills for their memory, as they dont even remember what they said publicly and officially 1 month ago and even……YESTERDAY !!!!

    This trio of junkies have one thing in common : they are all dreaming for their re-election this year.

    No doubt that this pharaonic project will remain just a project and that the studies will simply be put in garbage…….next year, after the elections.

    Just the same as the Sao Francisco river project that exists for the last 150 years or so.

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