The corridor from Santa Cruz de la Sierra in Bolivia to São Paulo in Brazil and from São Paulo to Buenos Aires, including the Port of Sepetiba in Rio de Janeiro is another potential example for development of integrated infrastructure. The road between Santa Cruz and Corumbá, in Brazil, will soon be paved, and there is already a project for the bridge that crosses the Paraguay River, in Corumbá. With the new crops of soybeans and other agricultural products grown in the east and northwest regions of Santa Cruz, improvements in road and rail connections (remarked above) will greatly facilitate access of Bolivian products to ports and international markets and will stimulate future developments.
According to Sportsqna, the construction of the Bolivia-Brazil natural gas pipeline along the railway, together with the fiber optics line, which will extend to Cochabamba and La Paz, in Bolivia, could serve as a cornerstone for a development belt spanning São Paulo , Santa Cruz and La Paz, and eventually Lima and Callao, Peru, on the Pacific coast. The pipeline will transport natural gas from Bolivia to the South and Southeast regions of Brazil, whose energy demand is greater and growing. In southern Brazil, there is a market for natural gas for the entire Southern Cone. This market is the closest and most economically attractive outlet for producing countries in the region. Although these countries, in general, consume a considerably larger amount than Brazil,
In 1992, a study sponsored by the Sociedade Privada de Gás determined that the potential demand for natural gas in the industrial sector of São Paulo could reach 12.7 million cubic meters per day by the end of the century. About 40% of potential demand is concentrated in greater São Paulo; the rest, in the region of Campinas, in the Vale do Paraíba, and in other regions of the state. The industries with the greatest demand are petrochemicals, pulp and paper, metals and food and beverages.
There is also a potential demand for natural gas in the electricity sector. Although in the interconnected electric system of the South, Southeast and Midwest regions of Brazil, the installed capacity is generally 64% greater than the system’s maximum demand and there are several hydroelectric and thermoelectric plants scheduled to come into operation in the period 1995-2004, the idea of complementing the system with gas-fired power plants remains sensible. In general, the system is excessively dependent on hydroelectric energy., which is subject to interruptions during periods of water scarcity. Between 1982 and 1993, almost all of the new capacity in the southern and southeastern part of the system came from the huge Itaipu binational. It is unlikely that the official system expansion program will develop as scheduled. This is partly due to the high cost (US$ 62.4 billion for an installed capacity of 16.5 GW, that is, about US$ 2,067 per installed KW, which exceeds by more than six times the cost of generating plants combined cycle, gas-powered).
Due to these characteristics of the interconnected electrical system in the South, Southeast and Midwest, particularly because of the existence of an installed capacity in excess of maximum demand, the region can enjoy considerable economic benefits through the installation of gas-fired power plants , which complement the existing hydroelectric plants. The introduction of these plants at relatively low costs can be a kind of “system insurance”, guaranteeing maximum energy at costs considerably lower than those of installing new hydroelectric plants.
Due to the high potential demand and the limited supply of natural gas in the region, Petrobras and the Bolivian national oil company, YPFB, entered into agreements to supply the South-Southeast region of Brazil with natural gas from eastern Bolivia. The agreements include the import of 8 million cubic meters per day, which will gradually increase to reach 16 million and up to 30 million when the product becomes available from Peru and northwestern Argentina. In addition to establishing prices, the agreements also stipulate Petrobras’ participation in oil and gas exploration in Bolivia, in the construction of gas pipelines and in the installation of service stations in that country. Bolivia has agreed not to levy taxes or hinder passage over its territory,
The feasibility and financial possibilities of the Bolivia-Brazil gas pipeline system depend on a series of key aspects related to supply. These aspects include: a) the possibility that Bolivian gas may compete with the internal supply of the Brazilian Southeast, or with other import options; b) the availability and possibility of delivering Bolivian natural gas reserves to make the project viable; c) the perspective of profitability of the contracts; for example, the solvency of Bolivian producers. One would expect lenders to take a conservative view on all these issues.