“You don’t build a pipeline for political reasons,” said Robert E. Ebel, energy analyst at the Center for Strategic and International Studies in Washington. “It should be a financially viable operation.” ..............How about Human Reasons? ....."Biz is biz, family is family.....don't mix the two ....... reminds me of other families' philosophyNYT December 2, 2006
Plan for South American Pipeline Has Ambitions Beyond Gas
By JENS ERIK GOULD
Plan for South American Pipeline Has Ambitions Beyond Gas
By JENS ERIK GOULD
GÜIRIA, Venezuela — President Hugo Chávez is not modest about his energy plans. He wants to build a 5,000-mile natural gas pipeline that stretches from this remote northern tip of South America to the bottom end of the continent.
Erecting possibly the longest pipeline in the world is the centerpiece of a broader effort by Mr. Chávez to strengthen ties among Latin America’s economies and shrink their dependence on the United States.
But from the outset, the $20 billion “great gas pipeline of the south,” planned to be more than twice as long as the United States border with Mexico, has generated political and environmental controversy at home and abroad.
Mr. Chávez, who deeply distrusts the United States and has raised the prospect that it may invade Venezuela to seize its oil, is seeking to diversify his country’s energy exports away from its biggest client and toward countries as far away as China and as close as Brazil.
Mr. Chávez has strengthened political ties with Brazil and Argentina in recent years. Brazil’s president, Luiz Inácio Lula da Silva, accompanied him to inaugurate a new bridge in Venezuela in November as Mr. Chávez was campaigning for re-election.
[The voting is on Dec. 3, with most polls showing Mr. Chávez ahead by a wide margin.]
And these days, he is dangling Venezuela’s significant reserves as an incentive as he asks his neighbors for a long-term natural gas commitment.
During a recent visit to the pipeline’s projected starting point, as oil workers and local residents crowded just outside this fishing town in Venezuela’s northeast, Mr. Chávez proclaimed, as he stood next to a row of national flags: “Here in this South America, from the Caribbean to Patagonia, we’ll build a great bloc of political, economic and social power to seek world equilibrium this century, where we don’t have one policeman who wants to be the owner of the world.”
That geopolitical aim is, in fact, the project’s biggest hurdle, energy analysts maintain. They say that the decision by Mr. Chávez to give his ideological goals priority over profit jeopardizes the success of the project.
“You don’t build a pipeline for political reasons,” said Robert E. Ebel, energy analyst at the Center for Strategic and International Studies in Washington. “It should be a financially viable operation.”
Though Venezuela could reap higher profit margins by exporting liquefied natural gas to higher-price markets like the United States, Venezuelan officials acknowledge that is not their goal.
“It’s not that the economic part doesn’t matter,” said Ángel González, general director of exploration and production at the Energy Ministry, “but it’s really not the most important part of this project.”
Venezuela is not the only country to use gas pipelines for political influence. Critics in the United States accused Russia of using energy politics after its giant company Gazprom stopped supplying Ukraine in an effort to raise prices at the start of the year.
Still, it is not clear that Mr. Chávez can muster long-term support in South America for a huge pipeline that would take at least a decade to complete. There is already skepticism and bickering over other energy deals, analysts say.
“Does political will last that long?” asked Michelle Billig of the PIRA Energy Group in New York, a consulting firm.
Brazil, for instance, may be wary of committing itself to a pipeline with Venezuela after Mr. Chávez applauded Bolivia’s nationalization of energy industries in 2006. That move jeopardized the natural gas investments of Petrobras, Brazil’s state-owned oil company, in Bolivia, said Anne Korin, co-director of the Institute for the Analysis of Global Security in Washington.
Argentina and Brazil, expected to be the project’s largest users, would find themselves dependent for supplies of gas on Venezuela and Bolivia, nations that have shown themselves to be politically volatile. Venezuela halted oil exports during a two-month national strike starting late in 2002, and tensions in Bolivia over how to manage energy resources have helped topple two recent presidents. Paraguay and Uruguay would also take part in the pipeline.
“In South America there is no project more challenging than this one in its history,” said Ricardo Savini, a business development manager for Petrobras. He said his company could take part in the pipeline if feasibility studies turned out favorable.
Venezuela’s natural gas reserves are largely undeveloped, and over the years, gas has taken a back seat to petroleum in Venezuela, one of the world’s leading oil exporters.
The Chávez government has made laws more attractive for investors in gas. That contrasts sharply with the blunt measures that have wrested control from foreign companies producing oil. Chevron has already found enough gas in the Plataforma Deltana area in the east for Venezuela to begin processing liquefied natural gas. Chevron expects to export liquefied gas to the United States and European markets through a $5.6 billion complex that the state oil company, Petróleos de Venezuela, plans to build outside Güiria.
Now, the state company also wants the complex to feed the transcontinental pipeline and says those plans are a higher priority than exporting liquefied gas.
Energy analysts say it will be a tall order for Venezuela’s budding gas industry to produce enough for both the L.N.G. plant and the pipeline, especially when current output does not even satisfy domestic demand for natural gas.
The pipeline also faces resistance from environmental groups because it would cut through the Brazilian Amazon and cross several large rivers to reach its destinations. Watchdog groups, like Greenpeace, say it could devastate some of the least-developed and least-studied areas in the dense rainforest and that the influx of laborers could bring diseases to remote indigenous communities.
“It will be terrible,” said Paulo Adario, Amazon campaign coordinator for Greenpeace. “The environmental impact seems very high.”
There is concern in Güiria, too, a city of 35,000 people. A month after Mr. Chavez broke ground for the gas complex on the environmentally sensitive Paria peninsula in September, the monument built for his nationally televised speech was still littered with the empty water bottles and soda cans of those who attended. “You manage a project that you supposedly consider won’t create any environmental impact on an international level — and then you do this,” said Rodolfo Foucault, a Güiria resident, when he saw the trash on an otherwise unspoiled coastline.
Still, many locals welcome Petróleos de Venezuela’s promise to spend more than $1 billion on infrastructure and local industries in Sucre, the northeastern state where Güiria is situated. “We want the development for our community,” said Antonio Calazán, who fishes mackerel and shark in the waters off Güiria.
While even critics are optimistic that the state oil company will keep its promise to build the liquefied natural gas plant, many say that the pipeline will be the latest in a long line of Venezuelan energy plans that never got off the ground or have been significantly delayed. For example, Mariscal Sucre, a promising offshore natural gas project, has been stalled for more than a decade.
Government officials have yet to disclose details on its routes or costs, saying that technical teams are performing preliminary studies. A model of the complex in Güiria’s airport does not offer any clues either, nor does it illustrate what part of the plant’s terminal will feed the transcontinental line.
There was no actual construction to be seen along the main road cutting through the plant site in Güiria other than the monument that Mr. Chávez opened — and even that appeared abandoned. The wind had torn down the young coconut trees that provided the president’s television backdrop.
Yet Mr. Chávez and his energy officials continue to champion the proposal. They have even devised a slogan for Güiria on the plaque, which Carlos Figueredo, Petróleos de Venezuela’s general manager for offshore natural gas, repeated at an industry conference in October in Sucre state.
“We have called Güiria the place where the gas is born that unites the people,” he said. “That gives you an idea of the magnitude that we’re looking at.”
Erecting possibly the longest pipeline in the world is the centerpiece of a broader effort by Mr. Chávez to strengthen ties among Latin America’s economies and shrink their dependence on the United States.
But from the outset, the $20 billion “great gas pipeline of the south,” planned to be more than twice as long as the United States border with Mexico, has generated political and environmental controversy at home and abroad.
Mr. Chávez, who deeply distrusts the United States and has raised the prospect that it may invade Venezuela to seize its oil, is seeking to diversify his country’s energy exports away from its biggest client and toward countries as far away as China and as close as Brazil.
Mr. Chávez has strengthened political ties with Brazil and Argentina in recent years. Brazil’s president, Luiz Inácio Lula da Silva, accompanied him to inaugurate a new bridge in Venezuela in November as Mr. Chávez was campaigning for re-election.
[The voting is on Dec. 3, with most polls showing Mr. Chávez ahead by a wide margin.]
And these days, he is dangling Venezuela’s significant reserves as an incentive as he asks his neighbors for a long-term natural gas commitment.
During a recent visit to the pipeline’s projected starting point, as oil workers and local residents crowded just outside this fishing town in Venezuela’s northeast, Mr. Chávez proclaimed, as he stood next to a row of national flags: “Here in this South America, from the Caribbean to Patagonia, we’ll build a great bloc of political, economic and social power to seek world equilibrium this century, where we don’t have one policeman who wants to be the owner of the world.”
That geopolitical aim is, in fact, the project’s biggest hurdle, energy analysts maintain. They say that the decision by Mr. Chávez to give his ideological goals priority over profit jeopardizes the success of the project.
“You don’t build a pipeline for political reasons,” said Robert E. Ebel, energy analyst at the Center for Strategic and International Studies in Washington. “It should be a financially viable operation.”
Though Venezuela could reap higher profit margins by exporting liquefied natural gas to higher-price markets like the United States, Venezuelan officials acknowledge that is not their goal.
“It’s not that the economic part doesn’t matter,” said Ángel González, general director of exploration and production at the Energy Ministry, “but it’s really not the most important part of this project.”
Venezuela is not the only country to use gas pipelines for political influence. Critics in the United States accused Russia of using energy politics after its giant company Gazprom stopped supplying Ukraine in an effort to raise prices at the start of the year.
Still, it is not clear that Mr. Chávez can muster long-term support in South America for a huge pipeline that would take at least a decade to complete. There is already skepticism and bickering over other energy deals, analysts say.
“Does political will last that long?” asked Michelle Billig of the PIRA Energy Group in New York, a consulting firm.
Brazil, for instance, may be wary of committing itself to a pipeline with Venezuela after Mr. Chávez applauded Bolivia’s nationalization of energy industries in 2006. That move jeopardized the natural gas investments of Petrobras, Brazil’s state-owned oil company, in Bolivia, said Anne Korin, co-director of the Institute for the Analysis of Global Security in Washington.
Argentina and Brazil, expected to be the project’s largest users, would find themselves dependent for supplies of gas on Venezuela and Bolivia, nations that have shown themselves to be politically volatile. Venezuela halted oil exports during a two-month national strike starting late in 2002, and tensions in Bolivia over how to manage energy resources have helped topple two recent presidents. Paraguay and Uruguay would also take part in the pipeline.
“In South America there is no project more challenging than this one in its history,” said Ricardo Savini, a business development manager for Petrobras. He said his company could take part in the pipeline if feasibility studies turned out favorable.
Venezuela’s natural gas reserves are largely undeveloped, and over the years, gas has taken a back seat to petroleum in Venezuela, one of the world’s leading oil exporters.
The Chávez government has made laws more attractive for investors in gas. That contrasts sharply with the blunt measures that have wrested control from foreign companies producing oil. Chevron has already found enough gas in the Plataforma Deltana area in the east for Venezuela to begin processing liquefied natural gas. Chevron expects to export liquefied gas to the United States and European markets through a $5.6 billion complex that the state oil company, Petróleos de Venezuela, plans to build outside Güiria.
Now, the state company also wants the complex to feed the transcontinental pipeline and says those plans are a higher priority than exporting liquefied gas.
Energy analysts say it will be a tall order for Venezuela’s budding gas industry to produce enough for both the L.N.G. plant and the pipeline, especially when current output does not even satisfy domestic demand for natural gas.
The pipeline also faces resistance from environmental groups because it would cut through the Brazilian Amazon and cross several large rivers to reach its destinations. Watchdog groups, like Greenpeace, say it could devastate some of the least-developed and least-studied areas in the dense rainforest and that the influx of laborers could bring diseases to remote indigenous communities.
“It will be terrible,” said Paulo Adario, Amazon campaign coordinator for Greenpeace. “The environmental impact seems very high.”
There is concern in Güiria, too, a city of 35,000 people. A month after Mr. Chavez broke ground for the gas complex on the environmentally sensitive Paria peninsula in September, the monument built for his nationally televised speech was still littered with the empty water bottles and soda cans of those who attended. “You manage a project that you supposedly consider won’t create any environmental impact on an international level — and then you do this,” said Rodolfo Foucault, a Güiria resident, when he saw the trash on an otherwise unspoiled coastline.
Still, many locals welcome Petróleos de Venezuela’s promise to spend more than $1 billion on infrastructure and local industries in Sucre, the northeastern state where Güiria is situated. “We want the development for our community,” said Antonio Calazán, who fishes mackerel and shark in the waters off Güiria.
While even critics are optimistic that the state oil company will keep its promise to build the liquefied natural gas plant, many say that the pipeline will be the latest in a long line of Venezuelan energy plans that never got off the ground or have been significantly delayed. For example, Mariscal Sucre, a promising offshore natural gas project, has been stalled for more than a decade.
Government officials have yet to disclose details on its routes or costs, saying that technical teams are performing preliminary studies. A model of the complex in Güiria’s airport does not offer any clues either, nor does it illustrate what part of the plant’s terminal will feed the transcontinental line.
There was no actual construction to be seen along the main road cutting through the plant site in Güiria other than the monument that Mr. Chávez opened — and even that appeared abandoned. The wind had torn down the young coconut trees that provided the president’s television backdrop.
Yet Mr. Chávez and his energy officials continue to champion the proposal. They have even devised a slogan for Güiria on the plaque, which Carlos Figueredo, Petróleos de Venezuela’s general manager for offshore natural gas, repeated at an industry conference in October in Sucre state.
“We have called Güiria the place where the gas is born that unites the people,” he said. “That gives you an idea of the magnitude that we’re looking at.”
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