Southern Gas Pipeline

From Global Energy Monitor

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This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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The Southern Gas Pipeline, commonly known as Integrated Gas Transportation System - Southern Zone of Peru or by its Spanish names SIT Gas, Sistema Integrado de Transporte de Gas al Sur or Gasoducto del Sur, is a proposed Peruvian pipeline designed to transport natural gas from the Camisea gas fields in the upper Amazon basin to Peru's Pacific coast.

Location

Starting at the Malvinas separation plant in the Camisea gas fields north of Cusco, the proposed pipeline would span roughly 1100 kilometers, crossing the Andes and passing through the Cusco, Apurímac, Arequipa and Moquegua regions en route to power plants at Mollendo and Ilo on Peru's southern Pacific coast, then continuing south and southeast to the regions of Tacna and Puno on Peru's southern border with Chile and Bolivia.[1][2][3][4][5]

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Project Details

  • Operator: Consorcio Gasoducto Sur del Perú[6]
  • Parent Company: Odebrecht SA, Enagás Internacional SLU, Graña y Montero SA[6]
  • Proposed capacity: 800 million cubic feet per day
  • Length: 684 miles / 1100 kilometers[7]
  • Status: Proposed
  • Start Year: 2025[8][9][10]

Background

As early as 2008, companies began proposing the construction of a trans-Andean gas pipeline linking the Camisea natural gas fields of the upper Amazon basin with cities and power plants along Peru's Pacific coast.[11]

In 2010, the Peruvian government signed an initial US$1.33 billion agreement with Kuntur Transportadora de Gas (KTG) for construction of the pipeline. However, the contract was ultimately canceled, prompting a new round of bidding for the project.[12]

In July 2014, the Peruvian government signed a new $7 billion, 34-year agreement for construction of the pipeline with the Consorcio Gasoducto Sur del Perú, a consortium made up of the Brazilian firm Odebrecht (75% stake) and the Spanish company Enagás (25% stake). The agreement gave Enagás responsibility for operating and maintaining the pipeline, while Odebrecht was to be in charge of EPC (engineering, procurement and construction).[13][14]

In September 2015, with the pipeline 34% complete, the Peruvian company Graña y Montero paid US$215 million to acquire a 20% stake in the consortium from Oderbrecht. At this point, construction work on the pipeline was still scheduled for completion by 2017. However, the project ran into a serious roadblock in March 2016 when Oderbrecht's CEO Marcelo Odebrecht was sentenced to 19 years in jail for his role in a major bribery scandal. Banks threatened to cut off funding for the Southern Gas Pipeline as long as Odebrecht remained part of the project[15], but attempts to find a replacement under the existing contract were ultimately fruitless, with American energy giant Sempra and Italian-Argentine conglomerate Techint pulling out of negotiations in November 2016.[16]

In January 2017, the Peruvian government announced that it would cancel its pipeline contract with Odebrecht, Enagás, and Graña y Montero due to the consortium's inability to meet funding requirements for the project.[6] The government signaled its intention to solicit new bids for completion of the project, but the exact timeline remained unclear, with media sources reporting that it would take at least a year to find new partners and negotiate terms for a revived pipeline deal.[12][17]

In November 2017, Peru's Minister of Energy and Mines, Cayetana Aljovín, announced that new bidding for the Southern Gas Pipeline project would be delayed until late 2018, prompting some analysts to question whether the project would actually be revived.[18] Aljovín indicated that future contracts for the pipeline will be co-financed by the Peruvian government and will no longer rely on subsidies from utility bill surcharges, noting that the pipeline's exact route and design may change as a result of these financing changes.[19] In December 2017, Alberto Ñecco, executive director of ProInversión, a government agency promoting private investment in Peru, confirmed that renewed bidding for the Southern Gas Pipeline was still on the table for 2018 and that both European and American companies continue to express interest in the project.[20] In January 2019 Peru's Minister of Energy and Mines, Francisco Ísmodes, affirmed that the project was still being pursued.[21]

In early 2020, several news reports suggested that the project might be revived, pending the expected March 2020 release of a feasibility study by the Mott MacDonald consultancy exploring financing options for the pipeline.[7] In March 2020, Cusco's regional governor Jean Paul Benavente called on Peruvian president Martín Vizcarra to uphold his promise to resurrect the pipeline and make it operational within the first half of 2022.[22] In July 2020, Peruvian lawmakers called for the proposed pipeline to be extended south to Puno, on Peru's southeastern border with Bolivia.[23]

In September 2020, following release of Mott MacDonald's feasibility study, which estimated a price tag of US$4.5 billion for the revamped SIT Gas project, Peru's Ministry of Energy Mines (MINEM) announced that the pipeline's scope would be expanded to include the southern regions of Apurímac, Puno and Tacna, in addition to the previously announced regions of Cusco, Arequipa and Moquegua. Vice Minister of Hydrocarbons Víctor Murillo indicated that the government would hold a tender for development rights to the project in the first half of 2021, with the goal of awarding a contract by July 2021 and bringing the new pipeline fully online by 2025 or 2026.[8][10] As of October 2020, MINEM official Miguel Incháustegui reported that the government was conducting a 35-year assessment of Peru's available natural gas reserves as a prelude to launching the tender in early 2021.[24]

As of July 2021, the President was expected to announce the restart of work on the pipeline.[25]

Articles and resources

References

  1. "Gasoducto Sur Peruano" (PDF). Proinversión.
  2. "¿En qué situación está el Gasoducto Sur Peruano?". América Noticias. February 16, 2020.
  3. "Gasoducto del Sur irá a nuevas manos tras anularse contrato con GSP", Perú21, 24 de enero de 2017
  4. "Desbloqueo del gasoducto sur peruano". La Prensa Regional. May 13, 2019.
  5. "Minem retoma gasoducto del sur: costará US$4.500 millones y arrancará en 2025 o 2026". El Comercio Perú. September 16, 2020.
  6. 6.0 6.1 6.2 "Caso Gasoducto Sur Peruano - IDEHPUCP". IDEHPUCP (Instituto de Democracía y Derechos Humanos de la Pontificia Universidad Católica del Perú). Retrieved 2021-04-15.
  7. 7.0 7.1 "¿En qué situación está el Gasoducto Sur Peruano?". América Noticias. February 16, 2020.
  8. 8.0 8.1 "Minem retoma gasoducto del sur: costará US$4.500 millones y arrancará en 2025 o 2026". El Comercio Perú. September 16, 2020.
  9. "Minem: SIT Gas (Gasoducto Sur Peruano) se concesionará el 2024 y llegará hasta Tacna". Revista Energia y Negocios (in español). September 17, 2020.
  10. 10.0 10.1 "Se pretende otorgar la buena pro del gasoducto del sur antes de 28 de julio -". Revista Minería y Energía (in español). September 21, 2020. Retrieved 2021-04-15.
  11. "Companies propose pipelines in southern Peru", Reuters, April 11, 2008
  12. 12.0 12.1 "El 'caso Odebrecht' paraliza la construcción del mayor gasoducto de Perú". El País. February 2, 2017.
  13. "El consorcio formado por Enagás y Odebrecht, adjudicatario del Gasoducto del Sur Peruano", Enagás press release, July 1, 2014
  14. "Pipeline Could Allow Peru to Sell Energy to Chile". Peruvian Times. July 8, 2014. Retrieved 2020-10-28.
  15. "Gasoducto: La problemática en el megaproyecto de gas peruano", El Comercio, November 27, 2016
  16. "Gasoducto Sur Peruano: consorcio Sempra-Techint no comprará acciones de Odebrecht", Semana Económica, November 23, 2016
  17. "Peru scraps Southern Gas Pipeline contract in Odebrecht fallout", Peru Reports, January 23, 2017
  18. "Cayetana Aljovín afirma que Gasoducto Sur Peruano sí va", El Comercio, November 13, 2017
  19. "Cayetana Aljovín: "El gasoducto tiene que costar menos"", Perú21, November 13, 2017
  20. "ProInversión: Empresas europeas y americanas interesadas adjudicarse el Gasoducto Sur Peruano", Gestión, December 19, 2017
  21. Trazo de gasoducto desde Camisea hacia el sur del país se conocerá este año, Diario Correo, Jan. 12, 2019
  22. "Cusco: Informe de Mott MacDonald permitirá licitar gasoducto del sur". La República (in español). March 12, 2020.
  23. "Peruvian legislators push for wider gas pipeline footprint". BNamericas. Retrieved 2020-10-21.
  24. "Minem alista certificación de reservas para licitar gasoducto del sur en primera mitad del 2021". Gestión Economía. October 5, 2020.
  25. Redacción LR (2021-07-10). "Reinicio del gasoducto del sur" (in español). Retrieved 2021-07-14.

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