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OPINION: What will happen to the GNA gasline?

November 25, 2008

SAEM – Since the ambitious GNA (Gasoducto del Noreste Argentino) gasline was announced for the first time by Techint and the former government of Néstor Kirchner in 2003, dear little has happened on the construction of the 1,500km pipeline. One analyst in Buenos Aires said Argentina needed the GNA as much as a human being requires water.

One of the biggest questions concerning the construction of the GNA is whether it will be ever built and in which form. The original project aimed to import only gas from Bolivia. While the 2006 gas purchase accord requires Bolivia to supply Argentina with 27.7MMcm/d from 2010, that date has been pushed forward to 2014 due to production snags.

The biggest surprise came when Argentina’s federal planning ministry quietly decided to change the route of the pipeline, its diameter and throughput capacity.

Taking into account Argentina’s ever-worsening economic problems and Bolivia’s inability to supply its southern neighbor with the gas it needs, it is highly likely that the GNA will never be built. In the face of such a prospect, Argentina, like Brazil, have no choice but to build more LNG terminal capacity to reduce dependence on Bolivian gas.

If dry gas was an important integrator in the region in the 1990s, LNG will enable South American countries to become more independent but at a higher cost when it comes to energy.

(The article can be reprinted as long as permission is requested from etessieri@latamreport.com and the source is mentioned)

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