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3,150 km Bolivia-Brazil  gas pipeline
Bolivian gas potential
Bolivian Gas Pipeline Construction
gas in north and south-west Bolivia
The Brazil-Bolivia Gas Pipeline

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The Brazil-Bolivia Gas Pipeline
The Brazil-Bolivia gas pipeline is the longest pipeline in Latin America. The first segment of the pipeline was inaugurated Feb 9, 1999. The second leg was completed by the end of 1999. The entire project was built at a cost of $2-bil. The money was provided by the Brazilian National Development Bank, the World Bank, Inter-American Development Bank and private banks.

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.

gas in north and south-west Bolivia
In 1995, scientists found large deposits of natural gas in north and south-west Bolivia.
Due to the country's economic situation, the Bolivian government did not have the resources to dig for oil wells or develop the area. At the same time, president Gonzalo Sanchez de Lozada was leading the country through a de- nationalization reform and encouraging foreign investment in previously national companies. Therefore, the president's next step was to add the national oil company, Yacimientos Petroliferos Fiscales Bolivianos' (YPFB), to its list of privatizations.

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. 

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 Mario Fantini (591-2) 244-3555 

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.