Latinnews Archive
Latin American Weekly Report - 15 January 1982
Opening up for the oil companies. . .and seeking a big gas deal
A consortium of US and Argentine companies have presented the government with a consultative document which proposes an investment of US$ 2.3bn in a major gas pipeline and LNG plant in Patagonia. The companies have been investigating the project for some time, and it is clear that the advent of a new military government in Buenos Aires, pledged to closer relations with Washington, has produced what they see as favourable conditions.
The project involves the construction of a 560-km gas pipeline linking the deposits in Loma de la Lata, in the province of Neuquen, to Puerto Madryn on the Atlantic coast. A processing plant is to be built at Puerto Madryn, with the capacity to produce 4,615m cubic metres of LNG and 600,000 tonnes of LPG a year. The LNG is to be exported to the US, and a special dock is to be built beside the plant from which tankers can be loaded. The LPG is to be sold on the international market.
The consortium is made up of four companies, two from each country. Argentina is represented by SOCMA and EDESA, while the US participants are Gulf Interstate and the Appalachian Co. EDESA is entirely owned by the Argentine navy, and its board of directors is composed of retired officers from the force.
SOCMA, however, is a private company controlled by Francisco Macri, a businessman with wide-ranging interests in Argentina. These include companies in oil, petrochemicals, construction and telecommunications. Until recently he was chairman of the board of Banco de ltalia y Rio de la Plata. He is president of Sevel, the motor company formed out of the merger between Fiat and Peugeot. He owns Impresit-Sideco, the civil engineering company which built the El Chocon-Cerro Colorado hydroelectric complex.
Macri is also closely identified with the Italian business community in Argentina; if the Italian-led Impregilio consortium wins the contract for the civil engineering work at the Yacyreta hydroelectric complex, his business empire will reap part of the benefit. His close associates include Ricardo Zinn, a former peronist deputy economy minister, and Jorge Haiek, energy secretary during the military administration of President Roberto Levingston.
Macri clearly hopes that his link-up with the Argentine navy will provide the political support necessary for the project's success. In fact, the plan was at one stage mentioned as part of the talks between officers close to General Galtieri and officials in the US administration. The announcement was made in something of a hurry, and its presentation in a consultative document means that many of the details have yet to be finalised. This has been attributed to fears that other companies might get in first. Among those interested were Litton (US), Inetec (Spain) and Ruhr Gas (West Germany).
Gulf Interstate has considerable experience in gas pipeline design--it was involved in the construction of the 4,200-km Alaskan pipeline in the US$ -while Appalachian specialises in LNG technology. A third US company, Natural Gas Pipeline Company of America, has signed a letter of intent to buy the consortium's entire LNG output over a 20-year period. The company president, George Morrow, pointed out that the Argentine project was in keeping with overall US policy to reduce its dependence on the Middle East and Africa for natural gas supplies.
Questioned by LAWR, SOCMA's vice president, Jorge Haiek, said the overall rate of return on the consortium's investment was likely to be around 5 percentage points above Libor. In terms of export value, the LNG and LPG sales are estimated at US$800m per annum.
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