Southern Gas Pipeline

This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor and the Center for Media and Democracy.

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The Southern Gas Pipeline, commonly known as Integrated Gas Transportation System - Southern Zone of Peru or by its Spanish name Gasoducto del Sur, is a proposed Peruvian pipeline designed to transport natural gas from the Camisea gas fields in the upper Amazon basin to Peru's Pacific coast. There have been no development updates since 2017 and the project is presumed to be shelved.

Location

The route of the proposed pipeline spans roughly 1050 kilometers, crossing the Andes from the Camisea gas fields north of Cusco to several destinations in the Arequipa and Moquegua regions along Peru's southern Pacific coast, including the gas-fueled power plants at Mollendo and Ilo.

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Project Details

• Operator: Consorcio Gasoducto Sur del Perú
• Parent Company:
• Current capacity:
• Proposed capacity: 800 million cubic feet per day
• Length: 652 miles / 1050 kilometers
• Status: Shelved
• Start Year:

Background

As early as 2008, companies began proposing the construction of a trans-Andean gas pipeline linking the Camisea natural gas fields of the upper Amazon basin with cities and power plants along Peru's Pacific coast.

In 2010, the Peruvian government signed an initial US$1.33 billion agreement with Kuntur Transportadora de Gas (KTG) for construction of the pipeline. However, the contract was ultimately canceled, prompting a new round of bidding for the project.

In July 2014, the Peruvian government signed a new $7 billion, 34-year agreement for construction of the pipeline with the Consorcio Gasoducto Sur del Perú, a consortium made up of the Brazilian firm Odebrecht (75% stake) and the Spanish company Enagás (25% stake). The agreement gave Enagás responsibility for operating and maintaining the pipeline, while Odebrecht was to be in charge of EPC (engineering, procurement and construction).

In September 2015, with the pipeline 34% complete, the Peruvian company Graña y Montero paid US$215 million to acquire a 20% stake in the consortium from Oderbrecht. At this point, construction work on the pipeline was still scheduled for completion by 2017. However, the project ran into a serious roadblock in March 2016 when Oderbrecht's CEO Marcelo Odebrecht was sentenced to 19 years in jail for his role in a major bribery scandal. Banks threatened to cut off funding for the Southern Gas Pipeline as long as Odebrecht remained part of the project, but attempts to find a replacement under the existing contract were ultimately fruitless, with American energy giant Sempra and Italian-Argentine conglomerate Techint pulling out of negotiations in November 2016.

In January 2017, the Peruvian government announced that it would cancel its pipeline contract with Odebrecht, Enagás, and Graña y Montero due to the consortium's inability to meet funding requirements for the project. The government signaled its intention to solicit new bids for completion of the project, but the exact timeline remained unclear, with media sources reporting that it would take at least a year to find new partners and negotiate terms for a revived pipeline deal.

In November 2017, Peru's Minister of Energy and Mines, Cayetana Aljovín, announced that new bidding for the Southern Gas Pipeline project would be delayed until late 2018, prompting some analysts to question whether the project would actually be revived. Aljovín indicated that future contracts for the pipeline will be co-financed by the Peruvian government and will no longer rely on subsidies from utility bill surcharges, noting that the pipeline's exact route and design may change as a result of these financing changes. In December 2017, Alberto Ñecco, executive director of ProInversión, a government agency promoting private investment in Peru, confirmed that renewed bidding for the Southern Gas Pipeline was still on the table for 2018 and that both European and American companies continue to express interest in the project. In January 2018 it was announced that a tender for the project would be held by the end of 2018. In January 2019 Peru's Minister of Energy and Mines, Francisco Ísmodes, stated that the project was still being pursued. However, there have been no development updates since 2017 and the project is presumed to be shelved.