VZCZCXYZ0023
PP RUEHWEB

DE RUEHBO #4125 1301355
ZNY CCCCC ZZH
P 101355Z MAY 06
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC PRIORITY 4845
INFO RUEHCV/AMEMBASSY CARACAS PRIORITY 7674
RUEHZP/AMEMBASSY PANAMA 9116 C O N F I D E N T I A L BOGOTA 004125 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 05/10/2016 
TAGS:        
SUBJECT: COLOMBIA/VENEZUELA PIPELINE; PIPE DREAM BECOMING A 
REALITY 
 
Classified By: DEPUTY CHIEF OF MISSION MILTON DRUCKER FOR REASON 1.4(B) 
AND(D) 
 
 1. (C) Summary: GOC officials confirmed that a long-planned 
gas pipeline from La Guajira, Colombia to Lake Maracaibo, 
Venezuela is set to begin construction in July 2006.  The 
pipeline is estimated to cost USD 300 million and will be 
financed entirely by the Venezuela's national petroleum 
company, Petroleos de Venezuela (PDVSA).  PDVSA will operate 
and maintain the pipeline to import natural gas to power 
refineries and power plants in Venezuela's strategic western 
oil region.  GOC officials anticipate the pipeline will 
generate approximately USD 153 million dollars in annual 
revenue.  Venezuela hopes to use the pipeline to sell natural 
gas to Colombia once PDVSA completes its domestic gas 
network, but Colombian officials doubt the viability of the 
plan. End Summary. 
 
 2.  (C)  The Maricaibo-La Guajira pipeline has been in the 
planning stages for many years (an MOU was signed between the 
two governments in 2001).  According to GOC officials, the 
BRV is desperately looking for natural gas to power 
refineries and electric generation facilities in the Western 
Maracaibo region.  The La Guajira pipe line will provide a 
temporary fix for Venezuela until the completion of the BRV's 
domestic gas infrastructure sometime after 2012.   GOC 
Ministry of Energy officials report the 26 inch diameter gas 
line will pump 4.24 million cubic meters of natural gas to 
Venezuela on a daily basis.  GOC officials estimate income 
from the exported gas will reach USD 153 million per year. 
 
 3. (C) The pipeline, costing an estimated USD 300 million 
will be fully financed, operated, and maintained by PDVSA. 
According to GOC officials, Venezuela hopes to use the 
pipeline to export natural gas to Colombia, once the BRV's 
domestic gas network is on line, and eventually extend the 
line to Panama for export to Central America or beyond.   GOC 
officials view this business plan with some skepticism, 
however, as new gas discoveries off Colombia's North Coast 
could provide low-cost alternatives to Venezuelan supply. 
 
 4.  (C)  GOC official described dealing with the Venezuelans 
as an "experience". They explained, despite the fact that 
Chevron owns and operates 50% of the natural gas fields in La 
Guajira, for example, PDVSA did not want the American company 
involved in this deal.  The GOC agreed to act as the 
purchasing and buying agent for all transactions.  Chevron 
noted to us however, that the arrangement with Ecopetrol 
provides for just such sales.  Therefore, they have no 
difficulty in being excused from negotiating with PDVAS.   To 
expedite the project, the GOC accelerated its environmental 
impact review (which began in January 2006 and is normally a 
120 week process), and expects a final determination by May 
15, 2006.  The "hard" target date for beginning construction 
is July 1, 2006. 
 
 5.  (C)  Chevron (protect) officials who produce the gas 
involved in the deal explained they are finding significant 
additional gas reserves off the Guajira coast.  We will 
provide more information on this in future reports. 
 
 6.  (C)  Comment: Despite current political differences on 
regional issues, the GOC and BRV are showing that "business 
is business".  For Colombia, the La Guajira-Maracaibo 
pipeline represents a guaranteed market for its abundant 
North Coast natural gas at no capital cost.  For its 
investment, Venezuela guarantees the steady supply of the 
energy it needs to expand oil production on western Lake 
Maracaibo.  Future returns to Venezuela, should it plan to 
use the pipeline for gas exportation down the road, are not 
as certain. 
WOOD