IEEE Power & Energy Magazine - November/December 2014 - 30

Trinidad and Tobago
Production: 40.6 bcm
Consumption: 23.0 bcm
Reserves: 375 bcm

Colombia
Production: 11.0 bcm
Consumption: 8.8 bcm
Reserves: 170 bcm

Venezuela
Production: 20.8 bcm
Consumption: 22.6 bcm
Reserves: 5,525 bcm

Peru
Production: 11.4 bcm
Consumption: 5.7 bcm
Reserves: 360 bcm

Brazil
Production: 14.6 bcm
Consumption: 25.1 bcm
Reserves: 396 bcm

Bolivia
Production: 15.8 bcm
Consumption: 2.5 bcm
Reserves: 281 bcm

Argentina
Production: 38.8 bcm
Consumption: 46.1 bcm
Reserves: 332 bcm

Chile
Production: 1.6 bcm
Consumption: 5.7 bcm
Reserves: 98 bcm

figure 1. Gas production, consumption, and reserves in South America (source: IEA).

Brazil will become the region's largest gas producer before
2025. The region will continue to exploit its hydroelectric
resources, with hydroelectricity accounting for more than
60% of electricity generation by 2035-the largest percentage contribution worldwide. Significant growth in solar photovoltaic and wind generation projects is predicted.
The presence of abundant gas resources created active gas
industries in countries like Argentina, Bolivia, and Peru in
the 1980s and 1990s, changing the energy mix of those countries. Combined-cycle, gas-fired generation plants became
an attractive low-cost, low-emissions alternative to coal, displacing other technologies that became less competitive due
to low-priced natural gas. This trend also included neighboring countries like Chile, through the creation of an integrated
gas network in the region that connected Argentina to Chile,
Bolivia to Argentina and Brazil, and Colombia to Venezuela.
That integrated development later failed, however, with
major implications for the countries involved. This was
largely due to poor gas exploitation and pricing policies.
In Argentina, for example, a major gas crisis took place in
2003-2004, leading to the interruption of cross-border supply to neighboring Chile. Despite the abundant gas reserves
in Brazil, Argentina, and Venezuela, these countries have
become net natural gas importers, and the region has become
increasingly dependent on expensive liquefied natural gas
(LNG) imports. Nowadays, while Peru exports 18 million m3
of LNG a day, Argentina imports 30 million m3 a day, Brazil
41 million m3, and Chile 16 million m3. Figure 2 shows the
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ieee power & energy magazine

annual imports and exports of natural gas for several South
American countries.
Another important element is that the region has a long
history of major hydroelectrical development, coupled with
the use of coal in thermal generation. While hydro is a lowcost generation source, its massive presence in the region
has historically created commercial challenges to the integration of the electricity and gas industries. Power generation plays a key role in the development of new gas fields,
but the absence of a firm gas-to-power demand (subject to
hydro variability) and the nonexistence of a secondary gas
market are incompatible with the typical take-or-pay characteristics of long-term gas contracts. Contracting LNG leaves
the countries subject to large gas price variability, and the
dimensioning of the required gas volumes is also a major
challenge. More recently, with the development of intermittent renewables and the difficulties of building hydro
resources with storage, opportunities for natural gas generators have again emerged due to their dispatchability and
positive environmental attributes.
This article describes the natural gas resources and infrastructure in Brazil and Chile, their present participation in
electricity generation, the applicable gas industry regulations, and the natural gas system's interactions with the
electricity sector. It is necessary to compare the economic
trade-offs between hydropower and local gas-fired generation. In both countries, hydropower is an expansion option
that has lower production costs and higher capital costs for
november/december 2014

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - November/December 2014