VECO Canada is finalizing an integrity management program for the Bolivia-Mato Grosso (Cuiaba Integrated Energy Project), a natural gas pipeline that extends from eastern Bolivia to Cuiaba, Brazil. A key component of the program is the supply, implementation and commissioning of a state-of-the-art integrity management software application providing complete data integration, collection and management capabilities to the two companies operating the pipeline: GasOriente Boliviano Ltda. (GOB) of Santa Cruz, Bolivia and GasOcidente do Mato Grosso Ltda. (GOM) of Brazil.

The GOB/GOM project is one of VECO's first pipeline integrity management installations in South America. Frank Sugrabes, Gas Pipeline Manager of GOB/GOM said, "One of the key requirements of the project is to provide comprehensive and integrated information about our pipeline assets, maintenance and inspection activities, along with geographical, cultural and environmental data immediately across our two organizations through the use of relational database technology and GIS-based software.  This project will also provide us a complete set of tools to conduct periodic risk assessments, collect future in-line inspection data, optimize the planning of our inspection and remediation activities and provide a central point of documentation."

The 400-mile long, 18-inch Bolivia-Cuiaba pipeline extends from an existing 32-inch, pipeline near Santa Cruz, Bolivia, to a 480-megawatt thermal power plant in Cuiaba in the Brazilian Amazon.
Enron Internacional and Shell Gas Latin America founded GOB. It is the owner of the Bolivian Spur Pipeline (Rfo San Miguel San Matias) that transports natural gas to Cuiaba Mato Grosso, Brazil.  GOM is the owner of the Brazilian Spur Pipeline (San Matias - Cuiaba) that supplies natural gas to the Mario Cova Thermoelectric Power Plant. The three companies, GOB, GOM and EPE (thermoelectric Power Plant) operate the Cuiabd Energy Integrated Project. 
 

Bolivian natural gas producers expect to begin exporting approximately 2.2 million cubic meters per day (MMCM/d) this month through the $2-billion Bolivia-to-Brazil pipeline financed by Petroleo Basileiro S.A., the Brazilian national oil and gas company.

Pipeline capacity allocations were established by Bolivia's national oil and gas company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) primarily on the basis of a reserves study performed by DeGolyer and MacNaughton (D&M) for year-end 1998.

Delivery of gas to Brazilian markets is considered fundamental to the exploitation and development of Bolivia's gas reserves. Linking Santa Cruz de la Sierra in central Bolivia to Campinas, about 100 kilometers from Brazil's eastern coast, the 1,970-kilometer main trunkline will deliver gas to markets in the Brazilian states of Mato Grosso do Sul and Sao Paulo. An 1,180-kilometer leg to Porto Allegre near the southeastern coast is scheduled as a second-phase construction project. 

Bolivia expects gas deliveries to reach 5 MMCM/d by year end. Throughput will average 18 MMCM/d over the first 7 years of the contract, which takes effect in 2000. Bolivia's commitment increases to 30 MMCM/d in 2007 and remains at that level for the duration of the contract. Over the next 20 years, Bolivia will provide more than 7 trillion cubic feet (Tcf) of gas to Brazil. 

Total Exploration Production Bolivia S.A. discovered major natural gas reserves in Block XX West in the Tarija department, Gran Chaco province, in southern Bolivia. Total is operator with a 41 percent interest in the discovery. The first well drilled on the block, the Itau X-1 (A) exploration well, was drilled to a total depth of 17,858 feet and encountered a 820-feet thick Devonian-age formation. In a drillstem test, the well flowed gas at a rate of around 865 Mcf/d and 839 b/d of condensate through a 48/64-inch choke. Under normal operating conditions this well could yield 2 MMcf/d of gas ad 2,000 b/d of condensate. Further appraisals are being conducted and should provide a more precise indication of the discovery’s potential within a few months. Mobil Boliviana de Petroleos and Tesoro Bolivia Petroleum Co. are partners in the discovery well. Also in Bolivia, Total recently made other promising discoveries on the adjoining San Alberto block. These reserves are strategically positioned for Total to supply regional gas markets. 
 

Petrobras Bolivia SA started production in the first development phase of Bolivia's San Alberto natural gas reserves as scheduled only 18 months after the project was launched. With a production capacity of 6.6 MMcm/d of gas, this initial phase is supplying the Brazilian gas market through the Bolivia-Brazil pipeline under a 20-year take-or-pay contract with Petrobras. Operator Petrobras Bolivia and partners TotalFina Elf and Empresa Petrolera Andina SA plan to increase gas deliveries to 12 MMcm/d when the project's second phase is brought on stream in 2002. Currently being launched, the second phase will have a production capacity of 6.6 MMcm/d of gas. The San Alberto project represents an initial step in developing the significant gas reserves recently discovered in the block as well as in the adjacent San Antonio blocks. 

Parker Drilling Co. announced two new contracts for international rigs. The first, Parker Drilling Bolivia, a wholly owned subsidiary of Parker Drilling Company, has signed a contract with Pluspetrol Bolivia Corporation. The contract is for the completion and testing of the Rio Seco West X1 well located west of Santa Cruz, Bolivia. The well utilizes Parker Drilling's rig 121, which commences operation in early September. The project is estimated to last 60 to 90 days. 

The second contract, Parker Drilling Nigeria Ltd, a wholly owned subsidiary of Parker Drilling Company, and The Shell Petroleum Development Company of Nigeria Ltd, have signed an extension on a 12-month contract with options to continue operations. The contract utilizes Parker rig 72, which has been under contract with Shell since July 1996. Rig 72 is one of the four Parker inland barge rigs currently operating in Nigeria, of which three are under contract with Shell. 

 In April 2003, Transierra opened Gasyrg, a new 260-mile pipeline which runs parallel to the Yabog pipeline. Gasyrg connects the San Alberto and San Antonio fields,
 which are operated by Petrobrás, in partnership with Repsol-YPF and TotalFinaElf, to the Río Grande pumping station. The pipeline has an initial capacity of 388
 Mmcf/d, which is expected to rise to 600 Mmcf/d by the end of the year when a compression station is completed in Villamontes.  Transierra is a consortium consisting of Petrobrás, Andina and TotalElfFina. 

 Cross-border Natural Gas Pipelines
 The Yabog pipeline also extends to Campo Durán in Argentina and was Bolivia’s only cross-border interconnection until 1999. Argentina’s Pluspetrol currently exports natural gas from the company’s Bolivian fields, Bermejo and Madrejones, to Argentina. 

 Bolivia-Brazil Pipeline (Río Grande - São Paulo - Porto Alegre)
 The nearly 2,000-mile Bolivia-Brazil pipeline is the longest in South America. When all of its compressors are completed in 2004, it will be capable of transporting approximately 1.1 Bcf per day. The first section of the pipeline was completed in December 1998, connecting Rio Grande, Bolivia to São Paulo, Brazil. Natural gas began flowing in July 1999. The second section, extending southward from São Paulo to Porto Alegre, was completed in April 2000. 

 Gas Transboliviano SA (GTB) owns and operates the 348-mile segment from Río Grande to Corumbá on the Brazilian border. Stakeholders in GTB include Transredes (51%) of which Bolivian pension funds make up 25.5%, Enron 12.75%, and Shell 12.75%, Gaspetro (9%), a subsidiary of Petrobrás, BBPP Holdings  (6%) of which BG Group holds 2%, TotalElfFina 2%, and El Paso 2%, Enron (17%), and Shell (17%). 

Transportadora Brasileira Gasoducto Bolivia-Brasil SA (TBG) operates the 1,620-mile Brazilian segment. Stakeholders include Gaspetro (51%), BBPP Holdings, consisting of British Gas, El Paso Energy and TotalFinaElf (9.66% each), Transredes (12%) of which Bolivian pension funds hold 6%, Shell 3% and Enron 3%, and  Enron (4%) and Shell (4%). 

 Second Bolivia-Brazil Pipeline (Río San Miguel - San Matías - Cuiabá)
 A second Bolivia-Brazil pipeline came onstream in April 2002. The 391-mile pipeline starts in Río San Miguel, Bolivia, where it connects to the main Bolivia-Brazil  pipeline. The pipeline then passes through San Matías and extends to Cuiabá, where the pipeline fuels a 480-MW thermal power plant. Enron and Shell developed the project. Gas Oriented Boliviano (GasBol) operates the 226-mile segment in Bolivia and Gasocidente do Mato Grosso Ltda (GasMat) operates the 175-mile segment in Brazil. The initial capacity of the pipeline is 99 Mmcf/d, with maximum capacity of 265 Mmcf/d, after the third phase of the project is completed. 

Other Pipelines 
The Bolivia to Paraguay natural gas project envisaged building a pipeline extending from southern Bolivia to the Paraguayan capital of Asunción. The project would also include building a 120-MW power plant in western Paraguay and a 750-MW plant near Asunción. Although Bolivia and Paraguay signed a protocol promoting this project in December 2002, there has been little progress towards realization of the project. 

A more ambitious project was the so-called Gas Integration project (Gasin) which would transport natural gas from southern Bolivia through northern Argentina,  where a spur would link to Asunción and eventually to Brazil. A feasibility study was set to be completed in June 2002, with operations starting in 2005. The $5 billion  project, however, has yet to get off the ground, mainly to due to the lack of a viable market for natural gas.

Bolivia-Brazil Gas Supply Agreement (GSA)
Exports to Brazil began in July 1999, under a 20-year, take-or-pay contract between YPFB and Petrobrás. According the to gas supply agreement (GSA), export volumes are expected to increase incrementally until reaching the pipelines expected daily capacity of 1.1 Bcf by 2004. Since signing an agreement with YPFB in 1997, Brazil has taken only a fraction of the natural gas, to which it had agreed. 

Government delegations from Bolivia and Brazil have met repeatedly over the last six months in attempt to renegotiate the contract. Brazil wants to import less and pay less for natural gas from Bolivia, suggesting a more flexible agreement. Bolivia indicated after a meeting held in May 2003 that it would not change the contract unless Brazil would guarantee that exports would increase in the future. Bolivia outlined three conditions for reducing the cost of natural gas to Brazil: 1) 10-year extension to the existing GSA; 2) Brazilian government develops policies to promote natural gas consumption; and 3) current revenues from the contract to the Bolivian treasury are maintained.

In July 2003, the Brazilian government responded by providing the Bolivians with a nine-point plan, designed to expand the natural gas market in Brazil. The program  proposed creating an oil, natural gas and renewable fuels department, expanding existing pipelines and commission new ones, retrofitting refineries so that they can use natural gas as feedstock for petrochemicals industry, and expanding the country’s  natural gas distribution network. The Brazilian government also indicated that in return  for their willingness to increase consumption, it would like to see a 30% decrease in the  price of natural gas. Brazilians have reportedly been paying US $1.94 per million Btu  (without including transportation costs) while the Argentines have been paying $0.82  per million Btu. 
 

The pipeline, which runs 3,150 km from Santa Cruz, Bolivia, via Sao Paulo, Brazil, to Porto Alegre in southern Brazil, is operated by a subsidiary of Brazilian oil company Petrobras, called Gaspetro.

The pipeline is jointly owned by Petrobras, Enron, Shell and BGI, the  international division of the former British Gas. Petrobras controls the Brazilian side of the pipeline and Enron and Shell control the Bolivian side. In January 2002, Petrobras announced it wanted to purchase Enron's natural gas projects in Bolivia, including its holding in the Brazil-Bolivia gas pipeline.

Currently, about 30-mil cu m per day of gas is transported via the pipeline. The Bolivian and Brazilian governments approved an expansion of the pipeline's capacity in December 2001. The increase in capacity, which is scheduled to go on-line in 2003, will allow Petrobras to increase the amount of gas it is transporting through the pipe to 40-mil cu m per day.
 

In mid-1994, U.S. based Enron Corporation won the bid to develop Bolivia's gas resources by constructing, financing, and eventually investing and operating a pipeline. 
In September, 1996, the presidents of Bolivia and Brazil met in Cochabamba, Bolivia to inaugurate the gas pipeline project, which would carry natural gas to south-west Brazil. While there has not been much environmental research conducted on this project, the implications of previous ventures in Ecuador, Peru, and Colombia suggest a cause for concern, especially since the pipeline is already under construction and no significant environmental risk assessment has been presented. 

Description
Upon his election in 1993, Bolivian president Gonzalez Sanchez de Lozada undertook a series of reforms with the goal of privatizing 50 percent of all national companies. Thus began a series of de-nationalizations, beginning with the airlines, hydroelectric power, and ending, most recently, with the natural gas and oil companies. Lozada gained a national consensus mainly because of his innovative solution to this problem: capitalization. The Bolivian government would not concede all control and profits over its companies. Rather, it would sell up to 50% of each company to the highest bidder. The 50% kept by the state would be used to create Bolivia's first universal pension plan in history. Therefore, when YPFB leaders realized that the government was offering Enron Corporation up to 55% of the project, they organized strikes and accused the state of having personal connections with Enron officials.
On March 22, 1996, Army troops took over refineries and natural gas facilities in anticipation of a strike by employees of YPFB. The government feared that workers would sabotage the existing Bolivia-Argentina pipeline in protest of YPFB's privatization and Enron's unusually high take-over of the national company. To solve this dilemma, Enron invited Shell into the venture, lowering its claim to 42% of the final proposal. This concession quelled most internal dissent by the YPFB, the Federation of Private Business (CEPB), and opposition parties and allowed Sanchez de Lozada to continue the venture unhindered.

The Bolivian gas endeavor began with unilateral trade with Argentina. However, in January of 1996, the Paraguayan and Bolivian presidents signed an agreement proposing a new pipeline and natural gas trading agreement. Plans for constructing another pipeline to Chile have also been in the making, but have been difficult. However, the Brazilian project is by far the most lucrative agreement, and has contributed to a grandiose new scheme taken on by Enron of creating one continental gas grid, with Bolivia as the natural gas hub supplying neighboring countries.
To complement this now regional endeavor, Bolivia has recently changed its status in MERCOSUR from that of an associate state to a full membership contract. On February 29, 1997, a new free-trade zone will slowly begin to be built between Bolivia and the MERCOSUR countries, to be completed in eighteen years. This new economic partnership can only help the pipeline project. 

Currently, Bolivia has 7.2 trillion cubic feet in natural gas reserves, a number expected to rise sharply once unexplored areas are tapped. Estimations for the length and width of the Bolivia- Brazil pipeline are 2,100 miles and 36 inches. The Bolivian government owns 60% of the pipeline within its borders and 20% within Brazil. The consortium of financiers; PETROBRAS (Brazilian Petroleum), the BTB consortium (British Gas, Tenneco Gas, and Australia's BHP Petroleum), and YPFB in conjunction with U.S. partners Enron and Shell, will be financing a project worth roughly US $2 billion. Of these, Enron will be primarily in charge of construction. The company hopes to break ground in the first half of 1997 and to finish by 1999.

Rio Grande (the region where the pipeline will originate) is located in the department of Santa Cruz, near the cities of Santa Cruz, Warnes, General Saavedra, and Montero. This region lies in the "Oriente", or eastern section of Bolivia closest to Brazil and Paraguay. The area's physical geography consists of subtropical forests and part of one of the world's largest remaining natural wetlands, the Pantanal, which extends into the north-west of Paraguay and the Mato Grosso region of Brazil. This fragile ecosystem is already being encroached upon by an advancing agricultural frontier resulting in overgrazing, deforestation of subtropical areas, pesticide pollution, and soil erosion. In addition, poachers have been wiping out large quantities of predator species, such as caiman, fox, jaguar, wolf and alligator, imbalancing the ecosystem. Although Sanchez de Lozada has proclaimed his firm commitment to sustainable development, the government has not made any concrete moves in this direction. 

According to current forecasts, Bolivian gas would be transported from Bolivia's Rio Grande to Porto Alegre, Brazil, passing through Puerto Suarez and the Brazilian states of Mato Grosso do Sul, Sao Paulo, Parana, Santa Catarina, and Rio Grande do Sul, with possibilities of extending up to Rio de Janeiro and Belo Horizonte in Minas Gerais. Such a path would undoubtedly cross unprotected and undeveloped land in Bolivia, no doubt the most economically disadvantaged party in this entire scheme and therefore the most vulnerable to exploitation by member countries. 

World Bank To Maintain Support To Help Bolivia Restore Growth
News Release No:2003/225/LAC
Contacts: Christopher Neal (202)-473-7229 Cneal1@worldbank.org Mario Fantini (591-2) 244-3555 afantini@worldbank.org 

WASHINGTON, February 19, 2003 - A delegation of the Government of Bolivia, comprising Foreign Affairs Minister Carlos Saavedra Bruno; Jose Guillermo Justiniano, Minister of Sustainable Development and Planning; and Roberto Camacho, Vice-Minister for Public Investment and External Financing, briefed the Bank's management Friday, February 14, on Bolivia's latest  political and economic developments.

The ministers provided details of the tragic incidents in La Paz last week, and outlined the most recent economic and financial measures taken by the authorities to consolidate macroeconomic stability and foster restored growth.

World Bank officials stated the institution’s readiness to continue working with the administration of President Gonzalo Sanchez de Lozada and to maintain substantial financial and technical  support for Bolivia within the framework of a comprehensive strategy, with the overall objective of overcoming the current difficulties and improving the quality of life of all Bolivians.