Uruguay to start natural gas talks with Bolivia in a few days

Buenos Aires (Platts)–14Jun2010/517 pm EDT/2117 GMT

      Uruguay plans to start negotiations in the next few days with Bolivia on
importing natural gas from that country for the first time, Uruguayan Minister
of Industry, Energy and Mining Roberto Kreimerman said Monday.

     He said he will meet with Bolivian Minister of Hydrocarbons and Energy
Luis Vincenti Vargas in Montevideo "in the next few days."

     "We want to begin with a certain amount so that we can later increase
[the imports]," he said in a statement. 

     Uruguay is seeking to diversify its gas supplies after suffering cutbacks
to deliveries from Argentina, its only existing supplier. 

     Argentina started scaling back gas exports to Uruguay as well as Brazil
and Chile in 2004 after a decline in its production led to shortages at home. 

     Its production of gas, which meets 55% of its energy needs, had fallen
11% to 127.1 million cu m/d in March from a peak of 143.1 million cu m/d in
2004 as low prices, high taxes and regulatory uncertainty discourage producers
from looking for new reserves.

     The country's proven reserves are down 44% from 2002.

     With production continuing to decline, Argentina is now turning to
imports for supplies, including by bringing in more from Bolivia and by
becoming more active in the global liquefied natural gas market. 

     At first, Uruguay will pipe in the Bolivian gas through Argentina.
Negotiations with Argentina have already started. A pipeline system running
between the two countries that has 8 million cu m/d of capacity. 

     However, there is a project to build a pipeline to take Bolivian gas
directly to Paraguay and Uruguay. Argentina and Uruguay also are working to
build an LNG regasification terminal, with operations set to start in 2012. 

     It will have capacity to bring in the equivalent of 10 million cu m/d,
with the supplies split evenly between the two countries. Some 2 million cu
m/d would go to the power sector, Kreimerman said. 

     Argentina will buy any supplies that Uruguay does not consume, he added.



Source: Platts

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