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Paraguay advances talks over Argentina-Brazil gas pipeline
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Paraguay is advancing talks with energy firms and high-ranking
government officials from Argentina and Brazil over a potential US$1.5
billion gas pipeline to connect the three countries, Senior Government
officials for Paraguay and Brazil told Reuters.
The plan being drawn up by Paraguay, reported in detail for the first
time, aims to compete with a rival Bolivian bid to repurpose existing
pipelines to transport Argentine gas to Brazil. If either project is
released it would mark a major potential shift in regional energy
flows.
"We want to sign a memorandum of understanding at a presidential level
(for the pipeline) in June," Mauricio Bejarano, Paraguay's Deputy
Mining and Energy Minister told Reuters. "There is a general support
for the project."
As declining gas output in Bolivia forces Brazil to look for other
suppliers, the potential option of gas coming from Argentina's booming
Vaca Muerta shale region via the Paraguayan Chaco is gaining traction,
said Rodrigo Maluff, Paraguay's Vice Minister of investment. It would
involve an estimated investment of US$1.2-US$1.5 billion, partly from
the private sector, he added.
Governments and companies from Argentina and Brazil have also engaged
in talks with Bolivia since last year over what they think could be
the fastest and cheapest option to transport gas from Vaca Muerta to
the north of the region, which would involve reversing the flow of
Bolivia's pipeline network.
In recent months, Paraguayan officials have courted investors in Sao
Paulo, met with Brazil's Energy Minister in Asuncion and officials
from Argentina. Tecpetrol, which controls some 15% of Argentina's
shale gas output, was part of these latest talks, as was Buenos Aires-
based Pluspetrol, Maluff said.
The companies did not respond to a request for comment.
The Paraguayans said the pipeline's initial daily capacity is
projected at 15 million m3 in the first stage.
Alexandre Silveira, the Brazilian Mines and Energy Minister who
travelled to Asuncion in April told Reuters that he was aware of
Paraguay's intention and expressed support, but said further studies
were needed.
"We agreed to set up another meeting with the private sector to better
study the viability," Silveira said.
Plans shared with Reuters show the new pipeline would run 110 km
(68.35 miles) from Campos Duran in northern Argentina to the
Paraguayan border, across another 530 km of arid, flat land in the
Paraguayan Chaco to reach Brazil.
An additional 400 km of pipeline would connect Carmelo Peralta on the
Paraguayan-Brazilian border to Matto Grosso do Sul and from there
potentially join the existing Gasbol line to Sao Paulo, Brazil's
biggest city.
Bolivia has for years been a key gas supplier to Brazil and Argentina,
but its declining output and the potential growth of the Vaca Muerta
shale region are poised to change the energy flow dynamic.
Silveira said that the two proposals were not mutually exclusive: "One
does not exclude the other," he said. The Paraguay option would help
Brazil supply energy to its Tres Lagoas fertilizer plant in Mato
Grosso do Sul, he added.
Brazil has made clear that Argentine gas from Vaca Muerta - the
world's second largest shale gas formation and fourth largest for
shale oil - will be needed to balance supplies due to the decline in
Bolivia's gas production.
"Brazil represents the demand," energy expert Victorio Oxilia, a
professor at the National University of Asuncion said. "Without the
Brazilian market nothing happens, so the position the country takes
with a project is fundamental."
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