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For a year now reports have been questioning the viability of the Southern Gas line, better know as the “Hugoducto,” one of Hugo Chávez’s banner projects. There are a number of reasons that support why the Hugoducto isn’t a very realistic project.

In the first place, it’s not very economical. The almost 12,000 km of pipeline that the Hugoducto requires would cost a mere $25 billion. Such a cost makes it preferable and more economical to build a liquefying plant and deliver the gas by ship.

Second, it could all turn into an ecological catastrophe. The plan has all those kilometers of Hugoducto pipeline going through the Amazon basin, one of the most sensitive and fragile ecosystems on the planet, after the Alaskan tundra region.

And third, it’s high cost versus limited benefits. The first 2,000 kilometers of Hugoducto won’t even benefit one million people.

However, all of this doesn’t mean that the concept of connecting all of South America, and even Latin America for that matter, through gas pipelines, is a bad idea. To the contrary, it’s a great idea.

The idea is so great that the former Minister for the Environment during Rafael Caldera’s Administration, Enrique Colmenares Finol, has proposed an alternative project that appears to be much more viable economically and environmentally: El Gran Gasoducto de Los Libertadores (The Great Libertadores Gas Pipeline). This project is based on two very simple but very important points.

Colmenares Finol’s project takes into account: First, that in South America the population centers are concentrated along the Pacific coast; and second, that those regions already have a number of local gas pipeline systems in place that are not inter connected. Colmenares Finol’s project proposes to connect all these systems together transforming them into one system. This would require 3,000 km of pipeline to be built at a cost of $2.7 billion, a little more than 10% of the $25 billion cost of the Hugoducto. Consequently, the Gran Gasoducto de Los Libertadores would connect at least 11 Latin American countries and the first 2,000 km would benefit over 50 million people. And it wouldn’t be too difficult to extend the pipeline north, even reaching the US, if the pipeline were to start from Panama.

If the real objective is to connect Latin America with gas, then this is the most sound and important project that has been proposed since 1923 when the idea of a Pan-American highway to connect the continent was thought up. But maybe the “Los Libertadores” project doesn’t fulfill the political ambitions that Hugo Chávez is after with his Southern Gas Pipeline.

VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld not necessarily share these views.

Editor's Note: This commentary was originally published by VenEconomy, on 10/19/2006. Petroleumworld reprint this article in the interest of our readers.

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Petroleumworld 10/25/06

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