The parties want “a basic agreement that guarantees the willingness of the countries to have trade in that area” of energy, he told reporters. A deal would be a major breakthrough for the Chileans, short of fuel since Argentina began restricting gas exports to Chile early last year to mitigate energy problems of its own. Talks began months ago, but both sides have been very quiet about them.
“A proposal was already handed over to Peru a couple of months ago. The Peruvian government has it, and we’re going to work on that basis,” Rodriguez added. However, free trade negotiations between Chile and Peru have been frozen due to a fresh dispute over alleged Chilean weapons’ exports to Ecuador during that country’s brief border war with Peru in 1995. In the case of the gas, though, “there’s no interruption of anything,” Mr Rodriguez said. The issues “cloud the relationship, but one has to keep insisting.”
Mr Rodriguez said recently that, pending a successful end to the negotiations, gas from the north could arrive from Peru’s Camisea fields, a major deposit that started producing gas in late 2004. “We’re talking about (setting up) all the (legal) guarantees that would make it possible for a bank to lend money to a company that would like to build a pipeline,” he said. Tractebel, a subsidiary of French utility major Suez SA, has already expressed interest in the project, and is studying the feasibility of a 1,150-km pipeline that would stretch from Pisco, Peru, to Tocopilla, Chile, and carry 23 million cum/d of Peruvian gas, with 18 million cum/d of that flow heading to Argentina. Other energy companies and the Chilean Finance Minister, Nicolas Eyzaguirre, have said that a pipeline solution couldn’t make money.
If the two sides reach a deal, Chile could import 14-15 million cum/d of gas from Peru, with 9 million cum/d of that total to be destined for Argentina. Currently, Chile has 22 million cum/d of Argentine gas contracted for supply, but on some days in April, Argentina supplied as little as half that amount. With fast economic growth in both countries, the two countries face limited energy resources, though Chile’s far north has excess generation capacity.
Separately, Argentine President Nestor Kirchner has reiterated that the lack of Argentine gas was due to a lack of investment by energy companies, although the companies say price freezes imposed on them after Argentina’s economic meltdown meant they had no incentive to invest. Kirchner also announced plans to invest $275 million in expansion projects for the nation’s five major natural gas pipelines, beginning in 2006. “If Argentina grows, we are going to need more gas to accompany this growth,” Kirchner said at news conference. The goal is to add up to 5 million cum/d to each of the five pipelines, although the total is only expected to reach 20 million cum/d, a gas regulatory official explained to reporters after the conference.
Chile’s government has tried to strengthen cross-border energy ties in the region, but with little success so far as Argentine natural gas supply has plummeted and Bolivia refuses to sell it gas to pressure Chile into territorial concessions. The government has also instructed state energy company Empresa Nacional de Petroleo, or Enap, to have a liquefied natural gas project, including the regasification plant, up and running by 2008. Enap has already called for bids on the project, Chilean newspaper Diario Financiero has reported.