Southern Gas Pipeline Suffers Another Setback

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Southern Gas Pipeline Suffers Another Setback

Tue, 12/06/2016 - 15:32
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Cusco City in the region Cusco, southern Peru
Cusco City in the region Cusco, southern Peru

US energy giant Sempra informed its partners in the Southern Gas Pipeline Project that it will not proceed with the purchase of shares of the Peruvian Odebrecht Group. Junior partners Grana y Montero of Peru and Spanish energy company Enagas SA are now left looking for alternatives.

The Southern Gas Pipeline is part of a larger project to develop power generation and distribution in the country. Peru is the only sustainable source of natural gas in the South American Pacific Ocean. The project includes the construction of a natural gas pipeline from Anta, in the region of Cusco, to the southern coast of Peru, the reinforcement of the existing natural gas pipeline network from the Malvinas separation plant to the Chiquintirca compression plant and the construction of a natural gas and LNG line from the existing transport system to the Anta Province.

“We continue to believe that the Southern Gas Pipeline, is a vital project for Peru and of which we will feel very proud when it is completed, as we will contribute with our work to the development and growth of Southern Peru,” said Mario Alvarado Pflucker, CEO of Graña y Montero Group.

Odebrecht, a family-owned Brazilian engineering conglomerate that controls 55 percent of the project, is at the center of Brazil's biggest graft scandal. Prosecutors in Peru have been probing potential wrongdoing in the awarding of the pipeline contract. And banks will not disburse a $4.1 billion loan for pipeline construction unless Odebracht is fully extricated from the project.

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