Venezuela, Brazil sign declaration
to build world’s longest gas pipeline

 By Michael Fox 
 Venezuelanalysis.com
 
Rio de Janeiro, Brazil —Venezuela’s and Brazil’s Presidents, Hugo Chávez and “Lula” da Silva signed a declaration to begin the first phase of the Great Southern Gas Pipeline late last week in Rio de Janeiro, Brazil. The Venezuelan president was in the neighboring South American country for the 31st Presidential MERCOSUR summit.

According to the Spanish news agency, EFE, the declaration is the first concrete document on the viability and future of the pipeline, which, if completed will be the largest such gas pipeline in the world. Construction could begin on the project by 2009, if the feasibility and engineering studies are positive.

The pipeline is planned to run 10,000 kilometers, from Venezuela to Argentina and have a capacity of 150 million cubic meters of gas per day. Construction of the pipeline is estimated to cost $23 billion.

The first phase of the pipeline will have a capacity of 50 million cubic meters of gas per day and will run 5,000 km from the gas fields of Mariscal Sucre in Güiria in Venezuela's Northeastern Sucre state to Porto de Sauipe, just outside of Recife, Brazil where Venezuela and Brazil have planes to build a joint refinery. According to the Brazilian market analyst firm, Ágora, just this first phase alone will demand 1,100 tons of piping. The second phase will connect this stretch to Argentina, Bolivia, Paraguay and Uruguay.

According to the President of the Brazilian state energy company, Petrobras, José Sérgio Gabrielli, the pipeline will also have bifurcations to all of Brazil's Northern capitals.

According to Gabrielli and Venezuelan Energy Minister Rafael Ramirez, Venezuela and Brazil are now set to begin conceptual engineering studies for the pipeline, which should be concluded by the end of this year. Venezuela and Brazil have designated $55 million to complete this first phase of conceptual engineering.

Further engineering studies may continue into mid-2009, the year when construction on the gas pipeline is expected to begin. According to Ramirez, the first phase could be complete in four years. The entire pipeline is expected to take 8 years to complete.

“Spinal cord” of South American energy integration.

"The declaration states that there is already an important definition in terms of the economic viability of the project in proven gas reserves," explained Ramirez last week, according to EFE.

"The pipeline will be fed initially with half of the production from the Mariscal Sucre gas complex that Petrobras and PDVSA are developing jointly in Venezuela," said Gabrielli last Friday.

The gas exploration of Mariscal Sucre will be carried out by one of five joint ventures formed in agreements last week between PDVSA and Petrobras. It is believed that Petrobras and PDVSA will initially produce close to 34 million cubic meters of gas per day from the complex. PDVSA will have 65% participation in the Mariscal Sucre gas camps and Petrobras will control 35%.

Venezuelan President Chavez has hailed the Great Southern Gas Pipeline as the “spinal cord” of South American energy integration.

“The Southern Gas Pipeline is the concept of Petrosur and [it is] the integration that we need," stated Chavez after signing the declaration.

But the impressive proposal has many critics. Environmentalists fear that the pipeline will destroy pristine habitat from Venezuela to Argentina and specifically the Brazilian rainforest. It is also feared that it will open up the region to further development. A petition was set up on-line early last year to convince the presidents of the participating nations to “reject the ´Southern Gas-duct´ project.”

Others, such as Venezuelan Petroleum Engineer, Nelson Hernandez, believe that due to various concerns including its length, the pipeline is simply not feasible or economically viable at this time.

Accordingly, to Brazil’s Diario de Noticia, Petrobras President Gabrielli explained last week that this year the pipeline project is passing through a “basic project” phase which will completely analyze the financial and environmental viability of the project. “We can still desist from the project in the end,” he stated.

The project, if completed, would be the largest in the world, more than doubling the immense Druzhba pipeline which pumps oil 4,000 KM from Southeastern Russian into Western Europe.

The signing of the declaration between Venezuela and Brazil took place following the MERCOSUR Heads of State meeting late last week.
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