CERA: LatAm Move Toward LNG Could Threaten Producers

Latin America's strategy to move toward LNG to satisfy natural gas demand could hurt regional gas producers, Cambridge Energy Research Associates (CERA) Southern Cone associate director Sophie Aldebert said.

For example, Argentina - which has inked an agreement to increase Bolivian gas imports - is considering an LNG re-gasification terminal project in order to lower its dependence on Bolivian gas and assure stability.

In fact, Bolivia might not be able to fulfill its supply contracts with Argentina and Brazil, Aldebert said, echoing Mauro Andrade, regional manager for consulting firm Deloitte's oil services department.

The two were speaking at the 3rd Annual Energy Integration Congress in Buenos Aires hosted by BNamericas and International Business Communications.

Chile, which is developing one LNG re-gasification terminal and planning another, could receive less than half its gas from regional sources by 2010 compared to 2005, when regional imports made up more than 75% of supply.

And Brazil will diminish the percentage of its gas supply from regional imports largely as a result of increased domestic production. This year, slightly more than half of its supply is coming from regional imports.

The country could receive between a quarter and a third of its supply from regional sources by 2010, depending on whether or not two proposed LNG re-gasification projects take shape.

LNG also could delay E&P opportunities in regional market as producers set out to replace a formerly captive market, which will be able to rely on other gas sources, Aldebert said.

The influx of LNG also will impact regional price dynamics by creating an international reference parameter, putting upward pressure on prices.

Antonio Assumpcao, president of Anglo-Dutch oil major Shell's (NYSE: RDS-B) Southern Cone oil and gas division, said in a presentation that participation in the international LNG market could act as a stimulus to regional E&P activities with the intention of exporting LNG.

In fact, higher prices could motivate some companies to invest in E&P to access increased revenues, Aldebert told BNamericas.

Peru is developing an LNG export project, which could be a possible path for Venezuela and Brazil to follow, Assumpcao said.

In providing LNG to the Atlantic basin, competition with the Middle East, particularly Qatar, would be key through 2010, after which other countries, including several in Africa, could begin supplies, Assumpcao said.

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