SOUTH AMERICAN ENERGY DAILY ROUNDUP (March 17, 2009): Argentine government seeks $300m for gas-fired power plants
South America Energy Markets (SAEM) will begin a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. I aim to publish SAEM Daily Roundup from Monday through Friday by noon London time.
March 17, 2009
ARGENTINA – GENERATION
Owing to the global financial crisis and the difficulty of getting financing, the Argentine government finds itself in difficulty in finishing construction of two 1.6GW combined cycle gas turbine (CCGT) plants in Campana and Timbues. According to a story in La Nacion, the government is having a very difficult time raising an extra $300 million by issuing debt to upgrade both plants from single-cycle to CCGT installations. Both plants are crucial in supplying gas-power-strapped Argentina during the winter months, when consumption rises. The plants should have been operating as CCGTs in a best-case scenario situation in winter 2008. One of the incredible matters about the government’s power-generation projects is that they do not have enough gas to fuel these power installations and are therefore required to import expensive diesel or heavy fuel oil.
BRAZIL – POWER INVESTMENTS
Brazilian power giant Eletrobras announced that it will invest $22 billion reales ($9.7 billion/€7.5 billion) in its 2009-12 investment plan, reports Sao Paulo-based daily Folha. The investment plan includes taking part in 7GW of new generation projects, build 15,000km of transmission lines. The interesting matter to watch is how these investments will pan out by 2012.
CHILE – ENERGY COSTS
Energy Minister Marcelo Tokman was quoted in Santiago daily El Mercurio as saying that the high cost of electricity was due to an abrupt fall in cheap imported gas from Argentina. Power plants that operated on gas have to now use diesel. He denied that Chilean consumers pay the highest power prices in the Southern Cone. Chile imports about 70% of its energy needs. One solution to Chile’s gas woes is Bolivia. However, a 19th-century geopolitical dispute with Bolivia has put on hold any chances of the landlocked country exporting gas to mining-rich northern Chile.
BOLIVIA – YPFB CORRUPTION SCANDAL
President Evo Morales gave his unconditional support to interim YPFB president Carlos Villegas. The state-owned energy company has been rocked by a corruption scandal that forced its former president, Santos Ramirez, to resign at the end of January due to alleged corruption allegations that involved the death of an energy executive. The opposition Podemos party has questioned Villegas’ integrity as president and linked him with the YPFB scandal. YPFB’s corruption woes will be an ongoing saga that will take months to resolve and, at the end of the day, will continue to nibble away at the little credibility the Morales government enjoys in the foreign investment community.
PERU – SAEM ANALYSIS
Peru’s gas-tariff policy will lead to a ruinous end if the government of President Alan Garcia does not take steps to raise wellhead prices, which are estimated at a low $1-$2/MMBTU. Cheap wellhead prices are seen as the cuplrit behind rocketing demand that has forced pipeline infrastructure from the Camisea fields to be outpaced by consumption. Last year, Peru faced power blackouts due to this problem. Even though there are plans to raise throughput capacity this year of the Camisea-Lima trunkline to 450 from 290 million cu ft/day, it will be only a matter of time when the present expansion of the TGP-operated trunkline will suffer the same problems. Some analysts believe that the only way to keep supply and demand in balance is by raising wellhead prices. This would force greater efficiency at gas-fired power plants.
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