Argentina’s energy ministry has suspended billions of dollars in bidding to build a natural gas pipeline and a high-voltage transmission system, as the economic and financial crisis worsened and low energy prices deterred bidders.
“Both bids have been delayed,” Argentine energy ministry officials said on Tuesday The official said it was uncertain when the tender would be rescheduled.
The pipeline project, announced last year, has attracted interest from a number of large US companies, including Corporaci ó n am é Rica, Pampa Energia and Techint group, as well as China’s Gezhouba Group and China Petroleum Pipeline Engineering Company.
Last year, bids were delayed twice as falling gas prices led companies to ask for more time to calculate their return on investment. Since then, as Argentina is approaching a debt default of more than $100 billion, raising the financing costs of its companies and squeezing their access to capital, investment returns have become increasingly difficult.
Hugo giampaoli, partner of Giga consulting, an energy consulting firm based in Buenos Aires, said: “cash flows from oil companies in Argentina are beginning to decline. They can’t continue their operations. “
The initial project required an investment of $2 billion to build a pipeline of more than 1000 kilometers from VacA Muerta in the southwestern province of neiuken to Buenos Aires. The two-year project will increase transportation capacity by 40 million cubic meters per day. The project plan is divided into two phases, the first phase will cost $800 million and increase the expected capacity by one third.
In addition, the government suspended a US $650 million public-private partnership (PPP) bid to build and operate a 490 km high-voltage transmission line, and said in a statement that the lack of access to credit at reasonable interest rates has pushed up construction costs and deterred bidders.
Editor in charge: WV