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SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (May 4, 2009): Brazil will begin importing 30MMcm/day from Bolivia within 10-15 days

May 4, 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, May 4, 2009


In order to satisfy rising power consumption in winter, Brazil will begin to purchase within 10-15 days 30 million cu m/day from Bolivia to fuel thermal power plants, reports Petrobras gas and energy director Maria das Gracas Foster said that southern Brazil is suffering from one of its worst droughts, which has also affected Uruguay’s hydropower output (see South American Energy Markets Daily Roundup, April 29, 2009). “[Power market operator] ONS ordered last Saturday at midnight to supply thermal plants with 14 million cu m/day,” she said. COMMENT: The announcement by Petrobras, which imports 99.9% of all of the country’s gas supplies, should be seen as a helping hand by Luiz Inacio Lula da Silva to Evo Morales’ government. Even though a drought has hit southern Brazil, the country presently has a surplus of gas. March consumption figures showed a 32.49% fall in gas consumption versus a year ago (see South American Energy Markets Daily Roundup, April 29, 2009).


Amid the May Day celebrations, the Bolivian government announced the 100% nationalization of jet fuel distributor Air BP, reports state-owned news agency ABI. “What we have done is recover for the state all of the (15) distribution points of the airports of the country,” said hydrocarbons minister, Oscar Coca. YPFB interim president Carlos Villegas said that the state-owned energy group will hire an outside company to assess the price of Air BP, which operates in Bolivia from 2001. COMMENT: Air BP appears tiny compared with the nationalization of the hydrocarbons sector in 2006 as well as last year of Andina, Chaco, Transredes and CLHB. It is doubtful that the acquisition will alleviate YPFB’s problems. In an election year, however, there are a lot of points taht can be scored with voters.


Criticism of the government’s energy policy has grown during the last three years after Evo Morales announced the nationalization of the hydrocarbons sector on May 1, 2006, writes Energypress. Citing a researcher of  CEJIS, the Santa Cruz-based human rights organization claims that even if the state controls on paper all of the country’s gas and oil fields, in practice this is not the case.  “Moreover, the companies control all the strategic information on reserves  that are buried below the ground, ” said Javier Aramayo of CEJIS. “[They] also decide when to invest and when not to.” COMMENT: CEJIS brings a lot of good questions about the effectiveness of the Bolivia’s nationalization program. Gathering from the problems of troubled state-owned energy company YPFB, nationalization has not produced effective results never mind guaranteed energy supplies to the market.


Argentina is looking into the possibility of building a fourth nuclear plant “in less than a year” after Atucha I, Embalse and Atucha II (under construction), federal planning minister, Julio De Vido, was quoted as saying in state-owned news agency Telam. The minister said that construction of Atucha II, which was originally supposed to come onstream in the 1980s, is “on schedule.” COMMENT: Plans to build a fourth nuclear plant reveal how critical Argentina’s energy situation is owing to declining gas and oil reserves. Why not first finish the long-overdue Atucha II plant and then begin construction of a fourth nuclear installation? Taking into account the government’s ever-worsening economic problems, there are question marks over whether it has an extra $1.8 billion to complete Atucha II.


Kuntur Transportadora de Gas (KTG) announced that it has chosen Goldman Sachs and Sumitomo Mitsui Banking Corporation as the company’s financial advisers in the construction of the $1.5-billion Gasoducto Andino del Sur, which will extend 1,085km from the Camisea gasfields to the southern port of Ilo, reports state-owned news agency Andina. Half of the financing for the trunkline project will be secured from financial institutions. KTG, which is controlled by New York-based investment fund Conduit Capital Partners, said that construction of the pipeline should begin in 2010. COMMENT: The construction of a large petrochemical hub in southern Peru gives a lot of economic and strategic sense in building the gasline. If there is something to worry about, that would be raising the country’s proved gas reserves, which stand at about 15Tcf.

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