Government Confirmation for Argentina-Uruguay Pipeline

abarrelfullabarrelfull wrote on 16 May 2012 08:18

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25 June 1998

The Government of Uruguay has officially confirmed that an international consortium including BG plc had been chosen to construct and operate the 215 km natural gas pipeline from Buenos Aires, Argentina to Montevideo, Uruguay.

The consortium of BG, Pan American Energy of Argentina and the Uruguayan state energy company ANCAP will work together on the major project to link the two South American capital cities. BG has been qualified by the Uruguayan government to be the operator of the pipeline.

The confirmation signals the start of engineering studies for extending the pipeline by adding a branch from the River Plate crossing for a further 920 kms to Porto Alegre in southern Brazil.

The pipeline system will be designed to transport nearly 20 million cubic metres of natural gas a day, supplied from basins in Argentina to markets in Uruguay and southern Brazil. The consortium is currently developing the detailed engineering work for crossing the River Plate with a 24-inch diameter, 50 km pipeline, reducing to 18-inch diameter for the remainder of the distance to Montevideo. Construction work is expected to begin later this year. The pipe is expected to be delivering gas by the end of 1999.

Construction of the extension to Brazil could begin following authorization from the Brazilian Agencia Nacional do Petroleo. The consortium is currently in discussion with the Brazilian authorities and several prospective key customers to agree the basis for the project extension.

The project is an important step in the integration of the energy network of three major Mercosur countries and would help attract new industries and thermo-electric power generating plants to the southern region of Brazil's Rio Grande do Sul State, as well as to Uruguay.

Notes to editors

On March 26 1998, BG and Pan American announced that they expected to be selected by the Uruguayan government to build and operate the pipeline, following the submission of the lowesttariff proposal. The bid was successful against international competition.

The Buenos Aires - Montevideo pipeline 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. BG and Pan American will each have a 40 per cent interest, with ANCAP to hold the remaining 20 per cent.

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.

The Argentina-Uruguay pipeline will add to BG's role as leading shareholder and operator in Metrogas - the gas distribution company supplying 1.9 million customers in Buenos Aires - and to its position as shareholders in the major pipeline bringing Bolivian gas to south-eastern Brazil. BG is also involved in developing several power generation projects in Brazil.

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