Identifier
Created
Classification
Origin
06LAPAZ692
2006-03-14 19:48:00
UNCLASSIFIED
Embassy La Paz
Cable title:
BOLIVIA AND URUGUAY SIGN ENERGY AGREEMENT
how-toVZCZCXYZ0000 PP RUEHWEB DE RUEHLP #0692 0731948 ZNR UUUUU ZZH P 141948Z MAR 06 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC PRIORITY 8421 INFO RUEHAC/AMEMBASSY ASUNCION 5682 RUEHBO/AMEMBASSY BOGOTA 2949 RUEHBR/AMEMBASSY BRASILIA 6827 RUEHBU/AMEMBASSY BUENOS AIRES 4061 RUEHCV/AMEMBASSY CARACAS 1384 RUEHPE/AMEMBASSY LIMA 1300 RUEHMN/AMEMBASSY MONTEVIDEO 3634 RUEHQT/AMEMBASSY QUITO 4024 RUEHSG/AMEMBASSY SANTIAGO 8547 RHEHNSC/NSC WASHINGTON DC RHEBAAA/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 000692
SIPDIS
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ENRG PREL ECON BL
SUBJECT: BOLIVIA AND URUGUAY SIGN ENERGY AGREEMENT
REF: 2005 LA PAZ 3065
UNCLAS LA PAZ 000692
SIPDIS
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ENRG PREL ECON BL
SUBJECT: BOLIVIA AND URUGUAY SIGN ENERGY AGREEMENT
REF: 2005 LA PAZ 3065
1. Summary: The Presidents of Uruguay and Bolivia signed an
agreement to strengthen energy cooperation between the two
nations on March 13. The agreement provides for the future
sale of Bolivian natural gas, thermoelectricity, and liquid
petroleum gas (LPG) to Uruguay. Although the agreement
expresses positive political will, it will be difficult to
implement due to the high costs of pipeline construction and
the lack of investment in Bolivia's natural gas and LPG
sectors. End summary.
2. President Evo Morales of Bolivia and President Tabare
Vasquez of Uruguay signed an agreement to strengthen
bilateral energy cooperation on March 13 in La Paz. The
declaration provides for the sale of Bolivian natural gas to
Uruguay via a pipeline through Argentina, the sale of
thermoelectricity generated in Bolivia to Uruguay, and the
sale of liquid petroleum gas (LPG). According to press
reports, a binational commission will be created to study the
pipeline design and establish sales volumes and prices for
the gas.
3. According to the Bolivian Minister of Hydrocarbon's
statements to the press, the pipeline to Uruguay would be
based on the Pipeline to Northeast Argentina (GNEA) that was
previously designed by Bolivia and Argentina with a capacity
of 20 million cubic meters per day. This amount would be in
addition to Bolivia's current commitment of 7.7 million cubic
meters of gas per day to Argentina. Uruguay's gas
consumption is fairly small in comparison at 300,000 cubic
meters per day. Exporting LPG would require amending
Bolivia's regulations on the sale of liquid fuel, which
prohibit the export of LPG. Press reports indicate that the
GOB intends to carry out this revision.
4. Comment: The accord between Uruguay and Bolivia expresses
both nations' desire to forge stronger relations between
themselves and with Paraguay to balance the power of Brazil
and Argentina in Mercosur, but presents several practical
problems that will impede its implementation. The
construction of a pipeline from Bolivia through Argentina to
Uruguay would require an investment of around USD 1 billion,
which would only be undertaken by investors if there were
assurances that there would be sufficient gas to flow through
the pipeline. To be economically worthwhile, the pipeline
would have to be designed to supply Argentina en route to
Uruguay, which only consumes a relatively small amount of
gas. Bolivian producers are currently producing at their
maximum, which is just barely enough to meet current
commitments. Producing another 20 million cubic meters per
day would require significant investment in Bolivia's
hydrocarbons sector, in which investment has practically
halted since the implementation of the hydrocarbons law in
May 2005. The plan to export LPG is also problematic --
Bolivia itself suffered from a severe LPG shortage in 2005
that resulted in mass demonstrations due to misguided
domestic economic policies (reftel). End comment.
GREENLEE
SIPDIS
SIPDIS
STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW
E.O. 12958: N/A
TAGS: ENRG PREL ECON BL
SUBJECT: BOLIVIA AND URUGUAY SIGN ENERGY AGREEMENT
REF: 2005 LA PAZ 3065
1. Summary: The Presidents of Uruguay and Bolivia signed an
agreement to strengthen energy cooperation between the two
nations on March 13. The agreement provides for the future
sale of Bolivian natural gas, thermoelectricity, and liquid
petroleum gas (LPG) to Uruguay. Although the agreement
expresses positive political will, it will be difficult to
implement due to the high costs of pipeline construction and
the lack of investment in Bolivia's natural gas and LPG
sectors. End summary.
2. President Evo Morales of Bolivia and President Tabare
Vasquez of Uruguay signed an agreement to strengthen
bilateral energy cooperation on March 13 in La Paz. The
declaration provides for the sale of Bolivian natural gas to
Uruguay via a pipeline through Argentina, the sale of
thermoelectricity generated in Bolivia to Uruguay, and the
sale of liquid petroleum gas (LPG). According to press
reports, a binational commission will be created to study the
pipeline design and establish sales volumes and prices for
the gas.
3. According to the Bolivian Minister of Hydrocarbon's
statements to the press, the pipeline to Uruguay would be
based on the Pipeline to Northeast Argentina (GNEA) that was
previously designed by Bolivia and Argentina with a capacity
of 20 million cubic meters per day. This amount would be in
addition to Bolivia's current commitment of 7.7 million cubic
meters of gas per day to Argentina. Uruguay's gas
consumption is fairly small in comparison at 300,000 cubic
meters per day. Exporting LPG would require amending
Bolivia's regulations on the sale of liquid fuel, which
prohibit the export of LPG. Press reports indicate that the
GOB intends to carry out this revision.
4. Comment: The accord between Uruguay and Bolivia expresses
both nations' desire to forge stronger relations between
themselves and with Paraguay to balance the power of Brazil
and Argentina in Mercosur, but presents several practical
problems that will impede its implementation. The
construction of a pipeline from Bolivia through Argentina to
Uruguay would require an investment of around USD 1 billion,
which would only be undertaken by investors if there were
assurances that there would be sufficient gas to flow through
the pipeline. To be economically worthwhile, the pipeline
would have to be designed to supply Argentina en route to
Uruguay, which only consumes a relatively small amount of
gas. Bolivian producers are currently producing at their
maximum, which is just barely enough to meet current
commitments. Producing another 20 million cubic meters per
day would require significant investment in Bolivia's
hydrocarbons sector, in which investment has practically
halted since the implementation of the hydrocarbons law in
May 2005. The plan to export LPG is also problematic --
Bolivia itself suffered from a severe LPG shortage in 2005
that resulted in mass demonstrations due to misguided
domestic economic policies (reftel). End comment.
GREENLEE