MercoPress. South Atlantic News Agency

Peru freezes Mercosur natural gas supply project

Peru denied Thursday that the current maritime limits conflict with Chile or the Fujimori incident were related to the cancellation of its participation in the regional energy network project which was to be addressed this week in Buenos Aires.

Cabinet chief Pedro Pablo Kuczynski said it was rather a matter of time and readiness.

"This has nothing to do with the maritime controversy or anything related to it. We still need time to have a clear idea of the volume of our natural gas reserves before making any commitments", admitted Mr. Kuczinski.

The meeting in Buenos Aires, an Argentine initiative to supply Peruvian natural gas to Mercosur members, Argentina, Chile, Brazil, Paraguay and Uruguay had to be suspended following Peru's decision not to participate.

Peru has vast deposits of natural gas in Camisea, in the Peruvian jungle, but still has to decide on a network of pipelines and export priorities.

In Chile the decision was interpreted as a natural consequence of the maritime dispute which emerged following the Peruvian Congress recent approval of a bill redefining sea base lines which infringe on what Chile considers its sovereignty area.

Furthermore the incident also froze bilateral negotiations for a free trade agreement between the two Pacific neighbours.

However Mr. Kuczynski argued that the Ministry of Energy and Mines considers too hasty accepting the idea of a regional energy grid, without previously taking into consideration the domestic market demand and exports to Mexico, which has been all along the main interested party in the Camisea natural gas.

"Little by little we've been moving towards the energy grid without having yet defined the extent of the liquid gas export project to Mexico, and this must be decided before we make commitments to our southern neighbours".

Energy and Mines minister Glodomiro Sanchez told Peruvian Congress last October that the "regional energy network was conditioned to the discovery of new gas reserves that ensured domestic supply. Only then would additional exports be authorized".

The natural gas net-work project was introduced with the purpose of reducing Mercosur dependency on Bolivian natural gas given the recurrent political instability of the landlocked country.

Bolivia holds the largest known natural gas reserves in South American behind Venezuela.