BG and Pan American Energy to Build Argentina-Uruguay Pipeline

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26 March 1998

BG plc and Pan American Energy expect to be selected by the Uruguayan government to build and operate a natural gas pipeline linking the capital cities of Argentina and Uruguay, following the opening of bids in Montevideo yesterday evening.

They submitted the lowest tariff proposal for the 215 km gas pipeline, from Buenos Aires to Montevideo, which will link Argentine gas with the growing Uruguayan market, and form a hub for the developing South American pipeline network.

The project will involve an investment by the partners of around US$135 million over two years, much of which is expected to be raised by project financing.

The association formed by BG and Pan American Energy will operate the pipeline for 30 years. The pipeline will have a minimum initial capacity of 2.5 million cubic meters of gas per day.

BG and Pan American Energy bid in February, following technical pre-qualification in December. The BG/Pan American consortium's bid won against intense international competition.

BG's regional managing director Dioclecio de Araujo said: "Winning this project forms an important part of developing our strategic position in South America. In time, this pipeline could bring gas from Argentina through Uruguay to major markets in south-eastern Brazil and play a key role in opening up the Mercosur energy market."

Pan American Energy president Richard Spies said: "Pan American Energy's participation in this successful bid represents another step in our plan to become a major player in the Southern Cone."

The pipeline will add to BG's role in Metrogas, Buenos Aires - the gas distribution company supplying 1.9 million customers - and to its position in the major pipeline bringing Bolivian gas to south-eastern Brazil. BG is also involved in several key power generation projects in Brazil.

Pan American Energy, one of the leading energy companies in the Southern Cone and the second largest oil and gas company in Argentina, has significant reserves in the region, along with interests in pipelines and power generation facilities. Pan American Energy is wholly owned by the Amoco Corporation, and the Bridas Corporation.

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