Odebrecht and Enagas to build US$ 4 billion gas pipeline

Peruvian authorities have granted a concession to a consortium made up of Brazilian builder Odebrecht and Spanish energy company Enagas SA to build a US$ 3.6 billion natural gas pipeline across the southern part of the country.

The pipeline is key to President Ollanta Humala's delayed plans for boosting domestic natural gas output to feed a future petrochemical hub and meet fast-growing electrical demand as large mining projects come online.

The consortium will invest between US$ 3.6 billion and US$ 4 billion to build the 1000 km long (620 mile) pipeline, and charge US$ 7.329 billion for services offered during the 34 year concession.

Odebrecht has a 75% stake in the project and Enagas controls the rest.

The pipeline project

The pipeline - the second to move natural gas from Peru's abundant Camisea fields in the jungle through the Andes and to the coast - will be built within five years.

The new connection will run to the southern coastal city Moquegua instead of to the capital Lima where the existing pipeline ends.

The government announced plans to build the pipeline after Odebrecht's plans for a similar project were held up by financing.

About half of the global mineral exporter's electricity is generated from natural gas and its plans to build petrochemical plants have hinged on a new, secure supply from Camisea.

Competing firm disqualified

Proinversion, the state agency responsible for public tenders, disqualified a competing consortium, formed by the French firm GDF Suez, US based Sempra Energy, Techint Group and Transportadora de Gas Internacional SA, after reviewing its technical proposal.

The losing group said Proinversion broke bidding rules by not giving it enough time to respond to an inquiry about the stake each company has in the consortium, and that it would have won the concession because it offered lower operating fees.

Proinversion and the Energy and Mines Minister denied any irregularities in the tendering process in a press conference late on Monday, saying the group changed key components of its original submission at the last minute.

The public-private concession is the second marked by controversy this year. In March, Proinversion awarded a US$ 5.66 billion contract for a subway line to the sole bidder after two competitors unexpectedly dropped out of the contest - triggering speculation that the process might have been flawed.

Humala's government has said it would award some US$ 13 billion in infrastructure concessions this year in a bid to spur economic growth.

Construction

Odebrecht and Enagas will lay more than 1000 km (622 miles) of pipe from the Camisea gas fields in the jungle, over the Andes, to power plants planned for the Pacific coast. The pipeline will spur Peru’s economy and allow for the development of a petrochemicals industry in the southern part of the country, Energy and Mines Minister Eleodoro Mayorga said.

“Power companies, transport companies and all Peruvians will have access to substantially cheaper energy,” Mayorga said when the bidding results were announced in Lima. “Camisea’s resources have been the basis for this country’s economic development for the last 10 years.”

Edited from various sources by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/01072014/odebrecht_and_enagas_to_build_us_4_billion_gas_pipeline/