Brazil bank would fund Bolivia-Argentina pipe expansion: report

Brazil bank would fund Bolivia-Argentina pipe expansion: report

Rio de Janeiro (Platts)--6Jun2006

Brazil's BNDES government development bank is ready to partly fund the
capacity expansion of a natural gas pipeline from Bolivia into Argentina that
would triple the capacity for Bolivian gas exports to its southern neighbor,
according to Argentine Planning Minister Julio de Vido, as reported in the
Buenos Aires-based Cronista Comercial newspaper on Tuesday.

According to Cronista, De Vido said Brazilian officials last week
confirmed BNDES was ready to "partially fund" the pipeline expansion to 20
million cubic meters/day from its current maximum capacity of 6.5 million-7
million cu m/d.

The pipeline would bring gas from southern Bolivia's Tarija Department to
gas-hungry northern Argentine provinces, Cronista reported, citing De Vido.

The existing pipeline between Bolivia and Argentina is operated by
subsidiaries of Brazil's Petrobras and Spain's Repsol-YPF. Its expansion would
come even after Petrobras in May said it was canceling plans to expand the 30
million cu m/d line linking Bolivia and Brazil following Bolivia's May 1
energy nationalization.

Timelines and details on the potential funding by BNDES were not given in
the Cronista article, although past estimates by Argentine officials were that
the expansion would cost about $1 billion.

A BNDES spokesman was not immediately available for comment.

Argentina has sought to boost its Bolivian gas supplies after it facing
three years of intermittent supply shortages, which in turn have forced
Argentina to several times cut gas exports to Chile. However, Bolivia wants a
major price rise for the gas it sells to Argentina, as well as guarantees that
Argentina will not resell the gas to Chile since Bolivia has an ongoing border
dispute with Chile and refuses to sell it gas.

According to the Bolivian media this week, Bolivia and Argentina
are close to striking a deal on larger export supplies to Argentina and a
higher price for the Bolivian gas. Reports cited Bolivian Energy Minister
Andres Soliz Rada as saying that Argentine President Nestor Kirchner may
travel to Bolivian capital of La Paz as early as this week to sign a new
supply deal, including a price hike, with Bolivian President Evo Morales.

--Joshua Schneyer, newsdesk@platts.com

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