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A.B. Dr. Francisco J. Pulit, Pluspetrol E&P, Argentina; C. D. Alfredo Poli, Pluspetrol E&P, Argentina.
Abstract
There is a world wide trend towards regional economic integration, this trend can be clearly perceived in Latin America and in particular in the Southern Cone region - Argentina, Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay . Natural gas and power generation have been the driving forces of the regional energy integration. The current infrastructure for gas transportation has accomplished one of the major challenges of the region, to bridge the distance between the producing fields and the markets of demand. The Southern Cone is in the process of becoming the worlds third largest integrated natural gas system. Expansion of the current pipeline network and power transmission lines interconnection will open new alternatives for delivering energy. Countries within the region still have to overcome regulatory issues that prevent the regional energy integration from fully materializing.
As a result, in this new scenario independent countries or isolated markets analysis are no longer feasible. The region will have to be considered as a whole with energy suppliers and demandants.
The gas exports in the Southern Cone date back to 1972 when Bolivia started exporting gas to Argentina. In the mid 1990s the first commercial pipeline connecting Argentina with Chile was built, currently six pipelines connect both countries. Additionally, two pipelines link Argentina and Uruguay. However the biggest break through was the conclusion in 1999 of the BtB pipeline linking the large reserves close to Santa Cruz (Bolivia) to the large markets of San Paulo. The construction of this intra-regional network is enabling gas exports to rapidly increase. Analyzing the status of reserves and markets in the southern Cone, it can be observed that, in terms of their location, a natural alignment of gas reserves areas with market areas will be produced and this will shape the new gas pipeline network.
2005 YEAR
Bolivia Per
2010
Uruguay
The largest potential market of the Southern Cone region will be Brazil which is still a nondeveloped market with natural gas participating in less than 4% of the total energy matrix. In particular the demand will proceed from the states of the south-southeast of Brazil which concentrate 60% of the population, generate 80% of the GDP and account for 71% of the total energy consumption. Mature markets in the region are also growing at important rates. For example, Argentinas gas demand has grown averaged a 5.5% per year since privatization in 1992. This growth rate was due mainly to the demand from gas-fired power plants and exports to Chile, Brazil and Uruguay. With the transport infrastructure in place linking the reserves to the market of demand and assuming that natural gas demand will double in the region during the next decade, the reserves needed to serve this demand will be in the order of 90 TCF.
PERU 6 TCF
BRAZIL 35 TCF
BOLIVIA 3 TCF
Argentina Uruguay
Currently there are three mayor interconnection points that allow Argentina to export 1.200 Mw. In addition, three contracts are in force for 365 Mw.
Argentina-Paraguay
The Hydroelectric plant of Yaciret has a generating capacity of 1.300 Mw and provides power to Paraguay and Argentina. Additionally, two other interconnections of 80 and 30 Mw exist.
Argentina Brazil
The station Rincn S.M.(Arg)-Garbi (Br) allows the importing and/or exporting of 1000 Mw with a minor interconnection of 50Mw.
A second interconnection station is currently under construction with a capacity of 1000 Mw, which is expected to be in operation by August 2002. A number of projects are currently under consideration with a capability of up to 1.200MW. Since May 2000, a Consortium of companies in Argentina has committed to export to Brazil 1000 Mw under a sale contract for 20 years.
Argentina- Chile
The 600 Mw power plant Central Termoandes located in the northwestern Argentina was conceived to interconnect to the Norte Grande system in Chile. In the central system currently under study is a project that would link both systems utilizing the surplus of both Argentina and Chile. The future step is to establish regional dispatch center that would maximize the efficiency of the system. An integrated regional generation would benefit the power systems complementing between hydroelectric generation and gas fired generation
Chile 4.30 3.80 3.30 2.80 2.30 1.80 1.30 0.80 1996 1997 1998 1999 2000 1.31 1.16 4.07
Chile was the fastest growing gas market in the region during this period principally due to the fact that consumption is still very low. The gas market development began after a series of gas pipes were constructed across the Andes, delivering gas to the southern, central and northern region of the country. Chile has still markets to develop, mainly the consumer market, with a high utilization and acceptance on the industrial side, principally in the thermoelectric plants. This explains the high growth that the gas utilization has gone through during this period of time.
As we may see, the growth in the power generation has also been considerable, experiencing a 30% increase during this period, mainly reflected in the installation of thermal energy plants in the Atacama Region for the mining industries. The Chilean economy has grown consistently during the considered period of time, in relation to the other countries of the region. This explains a 400% increase in the gas delivered to the country, but also speaks of the rapid introduction of an alternative energy source as natural gas, and the Gas to Power concept. Brazil
Brasil 2.00 1.80 1.60 1.40 1.20 1.00 0.80 1996 1997 1998 1999 2000 1.18 1.09 1.92
Brazil is experiencing a boom in the gas market, actually fueled by the new gas pipe network that integrates Brazil with Argentinean and Bolivian gas reserves. The gas utilization has almost doubled in the period we are considering, principally based on the previously low gas utilization in the energetic matrix of the country. The versatility and cost benefit relation of gas as an energy source has driven its consumption across industries and consumers. There have been significant changes in the recent years on the Brazilian legislation which encourage key energy players to enter the gas market, in which promises to be the largest market in Latin America. Brazil relies most of its energy generation on massive, large scale, hydroelectric projects, which provide a high quota in the energetic matrix of the country, where actually gas represents less than 4%. During the period revised we find that Brazil has a growing power demand, and no hydro projects which follow that demand, and according to government plans, the expansion of the power generation scheme will be based on new thermal generation units, lowering the dependency on rainfall. The Brazilian case presents some growth in the economy, although a 9% growth over 5 years just covers for demographic expansions. This reflects an almost stagnant economy, although the utilization of gas and power grew by 92% and 18% respectively over the same period.
Argentina
Argentina 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 1996 1997 1998 1999 2000 1.13 1.04 1.25
Argentina represents the most mature gas market in the Latin American region, with over 140 MMm3d during the high season. Although of the maturity of the gas market, there are still growth opportunities as we may see represented in the graph, reaching Chile and Brazil through gas pipes, which enabled a 13% growth over the considered years. The Argentina gas market is probably one of the most developed markets worldwide. The development of the markets dates to the early 60s, having a sustained growth and utilization factor in the energetic matrix. Even its present development there are still growth opportunities and new technologies to increase the utilization. The power market has developed steadily in the 1996-2000 period, growing a total 20%. There have been substantial investments in the electrical markets as an aftermath of the market deregulation during the 1992-1995 period. The power market has evolved to a free market policy, becoming highly competitive, lowering prices and industry margins. The Argentinean GDP has had poor results over the reviewed period, with a total growth of only 4%, and two consecutive recessive years. Even so, there has been a 13% and 25% growth in the gas and power markets.
The Paradox As we analyze the energy market evolution over the period 1996-2000 we see that there is a strong growth in the electrical and gas markets, not always linked to the GDP development. We can observe in the three cases that even facing stagnant or slow growing economies, there have been substantial increases in the gas and power markets, most of the time being those markets linked by the gas to power concept.
Power Generation 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 1996 Argentina 1997 1998 Chile 1999 2000
Argentina Chile Brasil 0.95 0.90 1996 1997 1998 1999 2000 1.20 GDP
1.16
1.09 1.04
Brasil
When we analyze the Argentina case, there have been increases 3 to 6 times greater than the GDP growth, in an already developed market and under a two-year recessive scenario. In the other two cases, we see a substantial increase, principally in the gas utilization, and we understand that comes because of an underdeveloped market, which is at its first steps and therefore faces an aggressive growth. We understand that the gas and power markets will continue to evolve positively, achieving higher growths than GDP development, in all Latin American countries, being the principal markets the ones analyzed here.
Conclusion
Winds of change swept Latin America in the 1990s with a wave of privatization, deregulation and foreign investments opportunities. The economic and political changes implemented have led to expansion through integration. The market forces jointly with private investment have proved to be very effective in the development of a competitive system, which benefits for both suppliers and demandants of energy. The consolidation of the regional natural gas network complemented by the interconnection of the power grids will be a critical factor for the economic growth of the region. However in some cases the hegemonic presence will have to give path to new players in order to achieve these objectives. One of the key challenges for the future is the sustainability of the political and economic changes so far implemented. The countries in the region have already accomplished the first steps towards regional energetic integration. These has driven the region to a non-returnable journey which makes interdependability between countries a higher than thought exit barrier. The region now faces an integrated energetic system with different development stages and country situations, which act as a continuous challenge to the system. Although energetic isolation is clearly not an exit alternative, tensions within the area will have consequent back and forth over the regulation policies. Anyway a sustainable regional policy will be achieved in the future.