The expansion should be completed by August this year, and will guarantee gas supplies to the greater Buenos Aires area, which is home to over 50% of Argentina’s population. The primary use for the gas is electricity generation in the region.
TGS is an affiliate of Brazil’s federally-run oil company Petrobras, and supplies 62.5million cum/d, or nearly 60% of the total Argentine demand, through its 7,419km pipeline, BNDES said. The majority of the loans, around $170million, will go to Brazilian construction firm Construtora Norberto Odebrecht SA, and Brazilian steelmaker Usiminas will provide Odebrecht with steel for the pipeline. “Everything will be produced in Brazil, and then exported to Argentina,” Guido Manteiga, president of BNDES, said at a press conference in Rio de Janeiro. “We’re creating jobs and income in Brazil. But Argentine companies will also be involved.”
Another $30 million of BNDES’s lending will go to Brazilian tubemaker Confab Industrial SA, a subsidiary Argentina’s Tenaris.
BNDES said the Argentina pipeline project will mark the first time in five years that it has used the ‘reciprocal credit agreement’ mechanism, known as CCR, laid down by the Latin American Integration Association, or ALADI. CCRs provide guarantees between Latin American governments for cross-border projects, and were suspended after the region’s economic crises of 1999 and 2000. “If there’s no payment, Argentina’s central bank will pay BNDES,” Guido Manteiga explained.
Argentina’s President Kirchner has publicly announced the pipeline project in Argentina, following which BNDES and the Argentine government signed an agreement, Guido Manteiga said, adding that this could be the first of several projects in Argentina financed via the CCR mechanism. Among these could be the partial financing of a gas pipeline expansion by Argentina’s Transportadora de Gas del Norte that could cost $170million.
Story courtesy Global Pipeline Monthly – www.gasandoil.com/gpm.