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.
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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.
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.
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