Peru's US$3.6bn GSP pipeline paves way for regional integration

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Wednesday, November 12, 2014

Peru's US$3.6bn Gasoducto Sur Peruano (GSP) natural gas pipeline will bring Latin America a step closer to regional energy integration, according to the project's majority stakeholder Odebrecht Latinvest.

Speaking on the sidelines of BNamericas' 11th Southern Cone Energy Summit in Lima on Wednesday, Odebrecht's pipeline area director Rodney Carvalho said the project would facilitate energy exports to Peru's neighbors.

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"The consumer markets that need energy most are all connected to Peru, whether it be Brazil to the north, Chile with the southern border or Ecuador on the northern border – they are three potential markets that are energy importers," Carvalho said.

"Peru's internal demand is currently lower than the energy park's existing capacity," he added. "So there could be an excess after supplying the domestic market that should and can be sold. The price of energy in Peru has a differential with the price of energy generated in Brazil and in Chile. This makes energy from Peru very competitive."

Carvalho said exports were more likely to be delivered in the form of "added-value" electric power from new thermoelectric plants.

"I think [exports] would be energy and not gas because liquid gas is sold as a commodity in any part of the world," Carvalho said.

Apart from feeding thermoelectric plants, the pipeline is also expected to provide gas to a planned petrochemical hub in Peru's south.

Brazil's Odebrecht holds a 75% stake in the project, which is due to be completed in December 2017, with the balance held by Madrid-based Enagás.

According to Carvalho, construction work on the first stage of the project is on track to begin in March following the local wet season.

A full financing agreement with a consortium of banks is expected to be finalized by mid-2015, Carvalho added.