Santa Cruz Govt to Contribute US$11mn for Pipeline Expansion

Sergio Acevedo, the governor of Argentina's southern Santa Cruz province, has authorized the disbursement of an additional 34.1mn pesos (US$11.1mn) to expand the transport capacity of a natural gas pipeline to bring gas to the city of Calafate, the Santa Cruz government said in a statement.

Construction of the pipeline is being partly financed by the national trust fund Nacion Fideicomisos, which had initially pledged to invest 80mn pesos of the 141mn pesos required for construction, Oscar Pierre, president of local gas distributor Distrigas, told BNamericas.

Distrigas, which will distribute the gas in Calafate, requested the additional financing in the middle of last year as a result of Calafate's continued demand growth largely stemming from its tourism industry, Pierre said.

The city has registered a 20% increase in demand since mid 2004, and studies indicate demand will continue to grow in the same way in the coming years, the statement said.

The pipeline will stretch 180km to Calafate from the Boleadoras field, which is operated by Brazil's federal energy company Petrobras (NYSE: PBR), and construction should be completed by mid 2006, Pierre said.

The project is the first of three stages in the roughly 374mn-peso project to supply gas to several Andean cities.

The Boleadoras field will also supply gas to the cities of Rio Turbio and 28 de Noviembre through a separate 175km pipeline, construction of which should be completed by year-end 2007, Pierre said.

In the third phase of the project, the Las Cerras field will provide gas for the city of Los Antiguos through a 230km pipeline. Construction should finish by the end of 2008, Pierre said.

The Las Cerras field has concessions separately operated by Argentine oil company Pan American Energy (PAE) and Spanish oil major Repsol YPF (NYSE: REP). Pan American will supply gas for the project, while the possibility of Repsol YPF also providing gas remains to be determined.

Distrigas was awarded the contract to distribute gas for this project in June 2005.

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