SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (April 27, 2009): Chile’s CGE announces $240m power and gas infrastrcture investments in 2009
South American Energy Markets (SAEM) publishes 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. SAEM Daily Roundup appears from Monday through Friday and is published by noon London time.
Monday, April 27, 2009
Chilean power group, Compania General de Electricidad (CGE), announced $240 million power and gas investments for 2009 in order to satisfy rising energy demand. CGE said that investments could rise even further if the right conditions exist. “If this happens, CGE group will not only invest in infrastructure, but we could also create more jobs,” said Pablo Guarda, CGE general manager, who added that the power sector offers a good springboard for growth. The energy company, through its interest in holding company Gasco, which controls Santiago distributor Metrogas, said that the new LNG regasification plant at Quintero will help Chile diversify its energy supplies from the second half of the year (see South American Energy Markets Daily Roundup, April 24, 2009). COMMENT: Chile continues to be an example for the rest of the region of how not to scare away foreign investment. The country’s energy problems would be in a much worse fix if the government would have followed the same interventionist policies of countries such as Argentina.
BOLIVIA/GAS EXPORT WOES
Even though some analysts believe that Brazil needs Bolivian gas for a long time to come, the fall in exports and lower prices continue to raise concern in the landlocked country, writes Santa Cruz-based daily, El Mundo. “Brazil is beginning to show its energy independence as it plans to lower imports in May and June while raising exports to Argentina,” the daily reports. Speaking to the head of foreign-commerce association IBCE, Gary Rodriguez, lower gas exports will end up causing hardships on a large segment of the population and impact public investment negatively. COMMENT: SAEM has followed this story for a number of weeks. Even though it is true that lower exports and prices will hit state coffers, there is a large political component to the ongoing debate. Those who are against the left-wing government of President Evo Morales are quick to highlight its failures, which are many. However, is it Bolivia’s fault that global energy prices have tumbled from record levels since July?
Low global crude prices, which have hit energy investments in countries such as Venezuela, forced state-owned energy company PdVSA to scale back in the last six month the use 21 (25%) of its 84 drilling rigs, writes Hidrocarburosbolivia.com. PdVSA justified the cutback on “the recession that affected oil markets due to a drop in crude prices.” OPEC has been forced to lower output by 4.2 million barrels of oil/day to keep prices from falling further. This has also affected OPEC founding member Venezuela. COMMENT: Blessed with enormous oil and gas reserves, Venezuela finds itself in between a rock and a hard place on how to continue financing multi-billion-dollar energy projects at home and abroad. The deterioration of energy revenues will impact the the government of President Hugo Chavez especially hard. Some have compared the situation to the 1980s, when Venezuela entered into economic crisis after oil prices plunged after rising in the 1970s.
(Originally published on April 24, 2009) State-owned energy company Petroecuador announced the construction of a liquefaction plant in southern Ecuador that will supply 10 million cu ft/day to the local market. The plant, which will be built by Ros Roca Indox Cryo Energy of Spain, will take about 2.3 years to come onstream in Canton El Guabo, a property owned by the energy company, located in the southern Ecuadorean province of El Oro. The first phase of the project aims to supply by truck the provinces of Pichincha (northern Ecuador), Guayas (Guayaquil) on the Pacific coast, and Azuay, located north of El Oro. COMMENT: The announcement by Petroecuador is significant because it places Ecuador as the third country after Peru, Venezuela and Brazil that will enter the gas liquefaction age. The plant is small, like the one in Brazil that transports LNG by truck from the Paulinia plant in Sao Paulo state, could see expansion in the future if new gas reserves are found. Ecuador’s proved and probable reserves amount to a mere 0.6Tcf.
(Originally published on April 24, 2009) The president of LNG Quintero, Antonio Bacigalupo, was quoted as saying that the $1.1-billion LNG terminal in central Chile is 95% complete, reports Santiago daily El Mercurio. The 2.5 million tonnes/year plant, which will begin operating at full capacity from 2010, will get its first shipment (145,000 cu m) of LNG in June. The consortium operating the plant comprises of BG Group, Enap, Endesa Chile and Metrogas. COMMENT: Hydrocarbons poor Chile imports about 70% of its energy needs. The sharp fall in gas supplies from Argentina came as a hard economic blow to Chile. The new plant will help Chile to diversify energy supplies and rely less on its neighbor for gas.
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