MercoPress. South Atlantic News Agency

South American gas pipeline “non viable and illusory”

Petroleum and energy experts seriously questioned this week Venezuela, Brazil and Argentina's project to build a 20 billion US dollars pipeline in South America describing it as somehow illusory and non viable.

"The project has no economic, financial, environmental or strategic logic" said Wagner Victer, Energy Secretary from the state of Rio de Janeiro during an oil and gas seminar held in this Brazilian city.

"Never in my life have I seen a project with so many question marks" or so much sensationalism added said Victer at the forum organized by Brazil's prestigious think tank Getulio Vargas Foundation Center for Business and Education.

The 8,000 kilometer pipeline would transport 150 million cubic meters of natural gas per day from Venezuela, across South America jungles, mountains and plains to Argentina and Uruguay.

Victer also questions what will happen to the project if a new administration is voted in Venezuela which is the driving force behind the project.

"I say this because the viability of the project is based on highly subsidized Venezuelan natural gas, which not necessarily would be attractive for another administration".

The project is "madness in terms of costs, with serious environmental consequences", said Victer who warned that Argentina, one of the markets for the hypothetical project, has such low duties on gas that it has made development of its own new reserves almost unviable". Furthermore Brazil has been investing heavily for years in Bolivia which is now a strategic energy supplier partner pumping 30 million cubic meters per day to the industrial hub of Sao Paulo.

However the head of the Oil and Gas Office at the Brazilian Mines and Energy Ministry, Joao Souto, admitted that the project is being assessed by six different teams of experts that will be offering in the near future a feasibility report. Venezuelan Energy Minister Rafael Ramirez estimates that the proposed southern pipeline would cost roughly 20 billion US dollars and be completed in 5 to 7 years.

Some analysts speculate the project is an attempt by Venezuelan president Hugo Chavez to reduce dependency on crude exports to United States, a country with which he is in a constant state of diplomatic tension.

Agreement to move forward on the pipeline was agreed last January at a meeting between President Luiz Inacio Lula da Silva, Argentina's Nestor Kirchner and Venezuela's Hugo Chavez.

"The political decision has been taken" said Chavez, the only leader to address reporters after the gathering.

The idea emerged from talks Lula, Chavez and Kirchner held last December on the sidelines of a summit of the Mercosur trade bloc in Montevideo. What Lula, Kirchner and Chavez dubbed the "great gas pipeline of the south" is intended to begin in southern Venezuela cross Brazil and finally reach a terminal in northern Argentina, though the exact route has yet to be determined.

Chavez's ultimate goal is to pump Venezuela's average daily output of more than 100 million cubic meters of natural gas - enough to supply almost all of South America - through a network of pipelines spanning the continent.

The ultimate goal is making South America "energy independent", by also tapping other significant gas reserves in Bolivia, Brazil, Argentina and Peru. Chavez also urged setting a 2020 target to have most vehicles in South America running on natural gas.