Uruguay Seeks to Produce Natural Gas for Domestic Consumption, Export

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Uruguay, which currently depends on natural gas imports, has been making investments in recent years to develop its natural gas resources.

Uruguay currently does not produce its own natural gas. Instead, it is imported via two pipelines from Argentina. One pipeline, the "Gasoducto Litoral," runs 27.2 kilometers (17 miles) from the city of Colon (Entre Rios, Argentina) to the Uruguayan city of Paysandu. The pipeline became operational in 1998 and is operated by the state-owned Administración Nacional de Combustibles, Alcoholes y Portland (ANCAP) (Montevideo, Uruguay).

The second pipeline, known as the "Cruz del Sur," starts in the city of Punta Lara (Argentina) and runs 57 miles down the Rio de La Plata, to the city of Colonia (Uruguay). From there, it runs overland for 147 kilometers (91 miles) to the city of Montevideo. The pipeline has been operated by the company "Gasoducto Cruz del Sur" since 2003. This firm was formed by BG Group, Wintershall, Pan American Energy and ANCAP.

Argentina is facing energy difficulties and has stopped exporting its natural gas. Because of this situation, Uruguay has developed a strategic plan to produce its own natural gas.

In 2012, the Uruguayan government launched a tender for 17 offshore exploration areas. Eight were granted to companies such as BP Alternative Energy (Pangbourne, England), which is part of BP Plc (NYSE:BP); BG Group (Reading, England), Total S.A. (NYSE:TOT) (Paris, France) and TULLOW OIL plc (London, England). The contracts are for exploration and production for 30 years. Exploration is under way in these fields.

In addition, the government has created Gas Sayago (a joint venture between the National Administration of Power Plants and Electric Transmissions [UTE] and ANCAP) to develop a floating storage and regasification unit (FSRU), known as the "Proyecto GNL del Plata." The unit will have a regasification capacity of 10 million cubic meters per day and a storage capacity of 267,000 cubic meters of natural gas, in the city of Montevideo.

Accompanying this project are some complementary works, such as dredging the access channel, a breakwater of 1,500 meters and a 19-kilometer-long, 24-inch diameter pipeline to transport regasified natural gas and connect with the existing "Cruz del Sur" natural gas transport system.

The operation of the FSRU has been awarded to GDF Suez (Paris, France), and the construction, which is under way, is being overseen by Brazilian company OAS Construction. The project is expected to be completed by February 2016. However, the bidding process for the connecting pipeline is still taking place, with the results to be announced this April.

The Uruguayan government hopes to supply natural gas to domestic and industrial users and export it.

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