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SOUTH AMERICAN ENERGY DAILY ROUNDUP (March 31, 2009): Peru-Chile maritime row will not help energy integration

March 31, 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 31, 2009

PERU-BOLIVIA-CHILE/BOUNDARY DISPUTE

A war of words has erupted between Bolivia and Peru after Lima handed its arguments to the International Court of Justice (ICJ) at The Hague over its maritime claim with Chile. It should not come to any surprise that the festering geopolitical dispute, which dates back to a late-nineteenth century war, has raised stronger calls in Peru to not export LNG from 2010 to Chile, when the region’s first-ever liquefaction plant comes onstream. After hurling official insults at each other, Peruvian nationalist leader Ollanta Humala put his two-cents worth by stating that President Alan Garcia had “offended the Bolivian people.” The diplomtic row, which is nothing more than a storm in a tea cup, started when there was speculation in Bolivia that Peru’s maritime claim in the ICJ would jeopardize Bolivia’s chances of ever getting from Chile an enclave or corridor to the Pacific Ocean.

ARGENTINA-BRAZIL/ HYDROPOWER PLANT

Brazilian minister of mines and energy, Edison Lobao, and his Argentine counterpart Julio De Vido announced that both countries would move ahead with the construction of a 2,700MW hydropower plant on the Uruguay River, reports Buenos Aires business daily Ambito Financiero. The large-scale project, which includes two hydropower dams with 1,800MW and 900MW installed capacity, was first conceived in 1973. Garabi forms part of a number of large-scale energy projects planned in the 1970s by the governments of Argentina, Brazil and Paraguay. Those in operation today are the Paraguayan-Brazilian Itaipu hydropower plant (14,000MW) and Yacyreta (1,840MW at 76 meters and 3,200MW at 83 meters), which is still not finished even though construction began in 1983. Argentina and Paraguay have also toyed with the idea of breathing lift back into the 3,000MW Corpus Cristi plant. Apart from impacting the environment, some analysts believe the deterioration of Argentina’s public finances will hinder the government’s chances of raising the height of the Yacyreta plant to 83 meters above sea level never mind begin building the Garabi plant.

ARGENTINA/ GNA GASLINE

The secretary of energy, Daniel Cameron, has agreed after a meeting with key industrial representatives to launch a decree that will be signed by President Cristina Fernandez de Kirchner to call a tender for the construction of the GNA gasline, according to Hidrocarburosbolivia.com. The GNA line, which was originally announced in 2004 to transport gas from Bolivia to Santa Fe province in Argentina, is today a much-water-downed version of the original $2-billion-plus pipeline. The new pipeline now aims to supply gas to the northeast Argentine provinces of Formosa, Chaco, Corrientes and Misiones. Some analysts are asking where markets for such gas are in underdeveloped northeast Argentina. Like so many other energy projects in Argentina, there is a good chance that this gasline may never be built.

BRAZIL/GAS LAW

The long-overdue Gas Law, which was signed into law on March 4 by President Luiz Inacio Lula da Silva, will be in force within 90 days, Marco Antonio Almeida, gas director of the ministry of mines and energy, was quoted as saying in Agencia CanalEnergia/Mercado Livre.  The ministry official said that he will meet with representatives of the gas sector in the first phase (15 days), followed by a second stage (30 days) in which the decrees will be drafted and implemented in the new law. New meetings will be held with representatives of the sector thereafter lasting 15 days. Almeida said that the new law will strengthen the role of the energy regulator ANP. Some analysts believe that a strong and independent regulator are crucial for the Gas Law to work effecitvely.

ARGENTINA/ POWER AND GAS TARIFF HIKES

Consumer group, Asociacion de Defensa de los Derechos de Usuarios y Consumidores (Adduc), claims that recent 300% for gas 500% for power tariff hikes will hit low-middle-income households the hardest, reports Salta-based daily El Tribuno. Adduc president Osvaldo Bassano said that the tariff hikes have forced low-middle-income families to pay the lion’s share of the utility hikes. The government has, however, frozen the power and gas tariffs of low-income families.

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

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.

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