Kirchner, Jujuy Sign MOU to Finance Gas Pipeline Interconnection

Argentina's President Nestor Kirchner and the governor of northern Jujuy province Eduardo Fellner signed on Thursday a letter of intent for the financing of the first stage of the proposed Argentina-Bolivia pipeline that will require investment of 18mn pesos (US$5.92mn), the presidential news service reported.

The first stage of the pipeline linking Jujuy to southern Bolivia will be a 95km pipeline from the Bolivian border city of La Quiaca to the Norandino pipeline at Miraflores in Argentina, newspaper La Nación reported.

Argentina currently supplies gas to northern Chile through the Norandino pipeline.

The federal government will provide 12.6mn pesos for the Jujuy-La Quiaca pipeline, while Jujuy province will provide the remainder, the letter said.

Works on the pipeline will start in 90 days, La Nación reported.

The Jujuy-La Quiaca pipeline will later be extended with the Catamarca and La Rioja pipelines as well as secondary pipelines whose financing is being finalized, newspaper El Cronista quoted federal planning minister Julio De Vido as saying.

The interconnection project with Bolivia was announced in 2004 as part of plans by Argentina's government to reverse an energy crisis in the country caused by frozen gas and power tariffs and lack of investment in energy infrastructure following the devaluation of the peso.

Bolivia currently exports some 7 million cubic meters of gas a day (Mm3/d) to Argentina, but the new pipeline project is designed to increase that by about 20Mm3/d in the next few years.

Before the new pipeline can start operations, however, Bolivia and Argentina must reach an agreement on prices. Bolivia's President-elect Evo Morales has said that Bolivia will no longer export gas to Argentina at current low prices of about US$2/MBTU.

Morales is scheduled to meet with Kirchner in Buenos Aires on January 17 to discuss raising gas prices, according to a previous BNamericas reports.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.