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SOUTH AMERICAN ENERGY DAILY ROUNDUP (March 25, 2009): Financing the construction of Argentina’s Atucha II will be an uphill battle

March 25, 2009

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 25, 2009


Owing to a shrinking government budget due to lower commodity and energy prices as well as slower economic growth,  a big question mark hangs over the future of some large-scale state-financed projects such as the long-overdue 692MW Atucha II nuclear plant, Daniel Montamat, former energy secretary (1999-00) and YPF president (1987-89), told SAEM.  In 1988, some analysts believed that the then 5-6-year delay in finishing construction of the nuclear plant would end up costing $4.5 billion if build by the 1990s. Montamat said that delays in the construction of the nuclear plant have cost the country $3.5 billion. “Finishing the plant is important because dismantling it would also cost money,” he said. “We now see the cost of building the plant rising to $800-$900 million from $500 million.”


Abrace, the association of industrial energy consumers, considers gas prices in Brazil “abusive.” One of the biggest gripes of large gas consumers in Brazil, after global oil prices tumbled from their record highs of $147.47/barrel in July, is that LNG is cheaper than dry gas. Abrace said that the average price of gas offered in February by state distribution companies was $8.70/MMBtu, while at the Henry Hub it was $4.68/MMBtu. Even heavy fuel oil, an important benchmark used to price gas in Brazil, sold by Petrobras was 29% cheaper at $6.72/MMBtu than dry gas.  Industrial associations such as Abrace, Abiape (independent generators), Abegas (gas distributors), Abiquim (chemical industry), Abividro (glass industry), Abar (private regulatory watchdog)  have approached the government and Petrobras about the matter with little luck.


Gas distributor Companhia Energetica de Minas Gerais (Cemig) announced investments of around 970.2 million reales ($430 million/€318 million) in expanding its services in the state of Minas Gerais, where it serves 17 million clients in 774 municipalities. The lion’s share of the investments (132.8 million reales) will be earmarked for distribution (Cemig-D) followed by 72.2 million reales in its generation and transmission sector (Cemig-GT).


In a speech given by President Evo Morales on the 130th anniversary of the War of the Pacific (1879-84), the head of state accused Peru’s litigation in the International Court of Justice (ICJ) in The Hague of undermining Bolivia’s chances of getting an outlet to the Pacific Ocean. Peru is awaiting a decision by the ICJ over its maritime border dispute with Chile. Peru considered Morales’ claims as unjustified and said they revealed “total ignorance” over the geopolitical dispute.


Former Spanish Prime Minister Jose Maria Aznar (1994-2004) of the right-wing Popular Party, stated in an interview published by Bogota daily El Tiempo that the only way out for Latin American countries in the present global economic situation was not to adopt populist economic policies. “There is a very deep and difficult crisis, but we have the ability to overcome it,” he said. “Those countries that adopt more rapidly measures that improve competitiveness and flexibility will overcome the crisis more rapidly.”

These briefs can be reprinted as long as as the source is cited.

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