BG/Pan American to lay Uruguay gas line

BG plc and Pan American Energy Corp. have been chosen by the government of Uruguay to build and operate a gas pipeline Buenos Aires to Montevideo. The pipeline is expected to be completed in late 1999 or early 2000 at a cost of $135 million. It will carry gas from Buenos Aires to Montevideo, where BG sees a potential market in power generation and industry. BG is operator of the pipeline and 40% interest holder, with Pan American holding 40% and the Uruguayan state oil and gas firm holding 20%.

April 6, 1998

2 min read

BG plc and Pan American Energy Corp. have been chosen by the government of Uruguay to build and operate a gas pipeline Buenos Aires to Montevideo.

The pipeline is expected to be completed in late 1999 or early 2000 at a cost of $135 million. It will carry gas from Buenos Aires to Montevideo, where BG sees a potential market in power generation and industry.

BG is operator of the pipeline and 40% interest holder, with Pan American holding 40% and the Uruguayan state oil and gas firm holding 20%. The pipeline license is for 30 years.

BG was formerly known as British Gas plc. Pan American was formed last year through a joint venture of Amoco Corp. and Argentina's Bridas Corp.

Project details

The 215-km pipeline will have initial capacity of 2.5 million cu m/day of gas. It will be 20-in. for 60 km of the route and 16-in. for the remainder.

A BG official said Uruguay's government has reserved 2 million cu m/day of the pipeline's ultimate design capacity of 5 million cu m/day during the first 15 years of the license, for gas supply to the state gas and electric power companies.

Although there is no power or industrial gas market in the Uruguayan capital to speak of, BG believes demand will develop on the back of the pipeline. There is much industrial growth on the outskirts of Montevideo.

Strategies

Dioclecio de Araujo, BG's regional manager, said, "Winning this project forms an important part of developing our strategic position in South America.

"In time, this pipeline could bring gas from Argentina through Uruguay to major markets in southeastern Brazil and play a key role in opening up the Mercosur energy market."

Mercosur is a trade pact involving Argentina, Brazil, Uruguay, and Paraguay.

BG also has interests in Metrogas, a Buenos Aires local gas distribution company supplying 1.9 million customers, and in the Bolivia-Brazil export gas pipeline, currently under construction (see related story, p. 42).

"Pan American Energy's participation in this successful bid represents another step in our plan to become a major player in the Southern Cone's energy market," said Richard Spies, Pan American president.