Shift: South America eyes LNG future
South America’s shifting gas industry
The profile of South America’s energy integration will shift from the construction of pipelines connecting different regions to liquefied natural gas terminals in the coast, according to Marco Tavares, partner at Brazil’s Gas Energy consultancy group.
“We do not envisage South America connected through pipelines, but through LNG exports and regasification terminals,” he said on the sidelines of the Rio Oil & Gas conference.
“South America hasn’t reaped the benefits of potential synergies for political reasons and I don’t see that picture changing in the medium term. Once you break contracts, it is hard to regain confidence,” Tavares said.
Early in the decade, it was widely expected that the construction of pipelines would integrate natural gas flows throughout South America.
“Our old expectation was supported by the fact we had some growing economies with little or no natural gas production and others with a sluggish economy but with plenty of reserves,” Tavares said.
Things have not gone as planned as Argentina “virtually destroyed” its natural gas industry by setting artificially low tariffs for the domestic costumers, Tavares commented.
“Argentina hasn’t enough energy to support steady economic growth,” he added.
In Bolivia, in turn, the nationalisation of natural gas assets and its tax regime has frozen new investments in natural gas exploration and production.
“Even in a best case scenario in Bolivia, under which companies were encouraged to make new investments in natural gas, it would take approximately two years to the results of any change there,” Tavares said.
In addition to the natural gas coming out from Brazil’s pre-salt play, Peru is the bright spot in the region, according to Gas Energy.
“Peru combines important natural gas reserves, a growing economy and a political picture (that is) somewhat stable,” Gas Energy partner Douglas Abreu said.