Uruguay & Bolivia Sign Gas Sales Agreement

Uruguay's energy and mines minister José Ignacio Villar signed an agreement with his Bolivian counterpart Guillermo Torres on Sunday to buy 150,000 cubic meters of gas a day (cm/d) through Argentina, local newspapers reported.

The agreement considers two stages, the first involving the sale of 150,000cm/d of gas to a power plant in Uruguay in the short term, and the second stage for larger volumes of gas from 2006, when the proposed gas pipeline linking Bolivia and northwest Argentina will expand transport capacity in the region.

Sales of Bolivian gas to Uruguay could come to 4mcm/d from 2006, Bolivia's deputy hydrocarbons minister Freddy Escobar told BNamericas last week. Argentina is Uruguay's main supplier at present, but its energy exports have been restricted this year as it comes to terms with domestic shortages.

Uruguay needs the gas urgently because natural gas use by large industries is currently restricted, Villar said. "We have a certain deficit. We could possibly solve this problem in Argentina - we are considering the option of covering [the deficit] from Bolivia in meetings with the Argentine authorities," he added.

Because of low water levels and the restriction of electric power imports from Argentina, Uruguay's state-owned power company UTE has been forced to generate power at its 220MW La Tablada diesel-fired plant and import power from Brazil.

Generating its own power from natural gas would be a cheaper option, and UTE is currently considering bids for a turnkey contract to build a 350-400MW combined cycle thermoelectric power plant that would take 26 months to build and could use Bolivian gas.

Furthermore, Villar said Brazil's federal energy company Petrobras is interested in building another thermo plant in Uruguay, and that that plant would need Bolivian gas supplies to be viable. "I can't go ahead with this project if I don't have certainty of supply," he said.

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