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Archive for Friday, January 20, 2006

South America hopes pipeline will bring energy independence

Proposal calls for 5,000-mile network through Amazon rain fores

January 20, 2006

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— Aiming to leverage their huge natural gas reserves, left-leaning leaders across South America are in serious talks to build a network of pipelines stretching thousands of miles to feed growing demand and wean themselves from American economic influence.

But oil experts say the show of brotherhood may backfire if this costly pipe dream becomes reality, because the network could turn the continent's neighbors against each other as they compete for clients.

On Thursday in Brasilia, 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. He said 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 March in Argentina 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 a 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 didn't want to compete, adding he thought there wasn'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.

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