Nations Sign Deal to Study Pipeline Idea

The Associated Press
Wednesday, December 7, 2005; 4:38 PM

CARACAS, Venezuela -- Venezuela, Brazil and Argentina have signed an agreement to study the possibility of a South American natural gas pipeline, officials said Wednesday.

Venezuelan energy minister Rafael Ramirez, his Brazilian counterpart Silas Cavalcante Silva and an Argentine delegation signed the preliminary agreement in Caracas on Monday, Venezuela's state oil company, Petroleos de Venezuela, S.A., said in a statement.


Energy ministers from the three countries will further discuss the issue at a summit of the Mercosur trade bloc later this week in Montevideo, Uruguay, according to PDVSA.

Venezuela has proposed a network of pipelines to carry its natural gas to South American markets and eventually tap into supplies in Bolivia, the continent's second-largest source after Venezuela.

President Hugo Chavez has said such a network would make South America self-sufficient in gas and pledged last month to build the estimated $10 billion pipeline, which would run south from Venezuela.

The cost of the pipeline and environmental concerns that it would cut through Brazil's Amazon rain forest have led to questions about the project's viability.

Almir Barbassa, the chief financial officer of Brazil's state oil company Petrobras, said Tuesday that to make such a huge project viable, the pipeline would need to be 50 inches wide, adding to its cost.

Venezuela is set to become Mercosur's fifth full member, along with Argentina, Brazil, Paraguay and Uruguay, at the summit beginning Thursday.