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Criticism Rains Down on Gas Mega-Pipeline

By Mario Osava*

Opposition is growing against the continent-wide project that would transport some 150 million cubic meters of fuel daily through the Amazon.

RIO DE JANEIRO - The South American gas mega-pipeline, which would transport fuel through the Amazon and other ecosystems, is being drowned in criticisms in Brazil, where many say the project is dead, given the recent nationalization of hydrocarbons in Bolivia.

The pipeline "was born half dead," with no economic viability, according to Wagner Victer, energy secretary for Rio de Janeiro state. The project "is foolishness," says environmental activist Roberto Smeraldi, director of Friends of the Earth/Brazilian Amazon.

The nationalization of the gas and petroleum industry in Bolivia, decreed on May 1, could be the coup de grace for the South American pipeline, say analysts. The Bolivian move, which especially affects the Brazilian national oil giant Petrobras, has raised tensions between the two countries and revived the controversy about Brazil's dependence on Bolivian natural gas.

The ambitious pipeline, which would be South America's largest physical infrastructure project, is promoted by presidents Hugo Chávez of Venezuela, Néstor Kirchner of Argentina, and Luiz Inácio Lula da Silva of Brazil.

It would extend at least 7,000 km, which could be lengthened to more than 10,000 km, depending on what routes are chosen, say experts. The pipeline would transport 150 million cubic meters of gas daily, and construction could have a pricetag of 25 billion dollars.

The project "has no economic coherence," it crosses many rivers and forests, making it impossible to establish its costs precisely, and it would make Venezuelan gas delivered to Argentina very expensive, unless it is subsidized by Brazil, said Victer.

"The gas pipeline would quintuple Brazil's current dependence in relation to Bolivia," he said.

Following the announcement of Bolivia's hydrocarbon nationalization, the Lula government in Brazil hurried to define plans with Petrobras for national self-sufficiency in natural gas supplies, accelerating domestic production and measures to import liquid natural gas.

Despite the new energy panorama in the region, the idea for the pipeline has not been abandoned. On Jun. 7, a meeting of ministers and other authorities in Caracas will assess the project, Venezuela's Energy Minister Rafael Ramírez confirmed in a conversation with Tierramérica.

There are seven work groups studying the economic, environmental, engineering, route path, financing and regulations related to the project. They are following the script laid out by Chávez, Kirchner and Lula in Sao Paulo on Apr. 26. The goal is for the pipeline to be designed and ready to be officially proposed to the rest of the South American governments in September.

Meanwhile, criticisms from environmentalists and energy experts continue to mount. According to Adriano Pires, director of the Brazilian Infrastructure Center, a consulting firm, there are numerous environmental, economic, political, financial and technological risks that make the pipeline nonviable.

The proposal for a "postal rate", which would divide the costs of gas transport amongst the countries involved, means subsidizing the most far-flung consumers -- in southern Brazil and Argentina -- to the detriment of the poorer regions in Brazil's north and northeast, said Pires.

In the political arena, the governments that use energy as a strategic tool, violating contracts and setting prices according to their political interests, contribute to "energy dis-integration," said the expert.

Bolivia, for example, is likely to suffer "a reduction in its natural gas reserves as a result of declining investment" after nationalization, which will affect its export capacity, Pires said.

There are also technological problems inherent in such an enormous project, aggravated by the fact that Venezuelan gas is associated with petroleum, he added. With so many uncertainties, "What bank would finance -- and how -- a project costing 25 billion dollars?" the consultant wondered.

Venezuela holds the largest natural gas reserves in South America -- around 4.2 trillion cubic meters -- but "90 percent is linked to petroleum, and to extract it would mean producing more crude," Elie Habalián, former Venezuelan governor in the Organization of Petroleum Exporting Countries (OPEC), confirmed for Tierramérica.

The investment plans of the government-run Petróleos de Venezuela (PDVSA), of more than six billion dollars by 2012, assure gas supplies for the pipeline, according to energy minister Ramírez. Current production, of 176 million cubic meters, will be nearly double in six years, with gas fields on land and in seabeds.

Integration and the necessary diversification of the energy matrix are the arguments wielded by those who defend the pipeline project. It is a long-term project that "requires more studies, with greater transparency," but would be important for a positive South American integration, maintains Luiz Pinguelli, former chairman of the state-held Eletrobras, which controls electricity production and transmission in Brazil.

Liquid natural gas, an alternative promoted by Pires and Victer as more viable and cheaper than the pipeline, is also the subject of international turbulence, and its price tends to rise with the strong demand in industrialized countries and global conflicts, says Pinguelli, coordinator of post-graduate engineering at the Federal University of Rio de Janeiro.

But not only the situation created by the nationalized fuels in Bolivia conspires against the South American pipeline. It is "nonviable because of its socio-environmental impact," according to Adilson Vieira, coordinator of the Amazon Working Group, a network of 600 organizations and social movements.

The gas pipeline would have "violent social effects," crossing many indigenous areas in Brazil and Venezuela, and requiring detours or "incalculable" compensations, he told Tierramérica.

"Obtaining environmental permits to cross the Amazon would be a huge task. If it all went well, without legal hurdles, it would still take five or six years minimum," estimates Smeraldi, of Friends of the Earth.

Furthermore, it would run into agrarian disputes, especially in northern and central Brazil. It is "extremely difficult that the pipeline would be built," but the debate must continue because "other madness" has become reality in the continent, he warned.

Resistance from environmentalists is intense in Venezuela. The organization Friends of the Great Savannah (Amigransa), which defends a nature park on the country's southeast border with Brazil, says the project would be "the definitive step for the destruction of the Amazon, the Venezuela Guayana and diverse ecosystems of the Caribbean and Atlantic coastline."

"The mere planning of this monumental project, which hasn't consulted everyone, violates agreements on economic, social and cultural rights," Amigransa spokeswoman María Eugenia Bustamante told Tierramérica.

For now, in response to the nationalization of hydrocarbons in Bolivia, Petrobras announced that it will build two regasification plants in Brazil in order to import liquid natural gas, with a capacity for processing 18 to 20 million cubic meters a day. They will be on rented floating craft, the quickest and cheapest way to create the conditions for use of this alternative.

Brazil has also decided to speed up national production of natural gas in the three maritime basins in the southeast, adding 24.2 million cubic meters daily to the supply by the end 2008.

Petrobras aims to maintain the contract that calls for importing 30 million cubic meters of Bolivian gas a day until 2019, but has ruled out the previously forecast doubling of that volume.

* Mario Osava is an IPS correspondent. Humberto Márquez contributed reporting from Venezuela.

Copyright © 2007 Tierramérica. All Rights Reserved


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