The government of Uruguay is likely to continue the development of an LNG regasification plant off the coast of capital Montevideo on its own, should Argentina's government decide to pull out of the project, a senior source at the former country's state power company UTE told BNamericas.
UTE and its sister firm, state oil company Ancap, are managing the project on behalf of the Uruguayan government through the Gas Sayago JV, along with Argentina's state power firm Enarsa.
However, recent speculation in the Uruguayan press suggests that Argentine authorities are considering pulling out of the GNL del Plata project.
"It's the intention of our government to have the regasification plant by whatever means. I think it will still be possible if we can secure a gas sales contract with Argentina," the source told BNamericas.
Recent gas shortages across Argentina make the likelihood of a sales contract likely, according to analysts.
Under present proposals, first phase production at the plant would be 10Mm3/d, equally distributed between the two countries, with maximum capacity reaching 15Mm3/d.
A tender for construction of the plant is expected later this year, and the parties involved have predicted that the plant will be online in 2014.
Gas Sayago sources have previously put costs on the Uruguayan side at US$400mn. Similar investment levels had also been anticipated from the government of Argentina.
In related news, Ancap has formally signed an agreement with Argentina's largest oil firm YPF, under which the latter will conduct oil exploration across a 10,000km2 area in the departments of Artigas, Salto, Tacuarembó and Rivera.
The one-year contract will allow YPF to conduct small-scale surveys before it then decides whether to move on to further exploration phases which could include drilling.
YPF now joins US firm Schuepbach Energy in conducting exploration work onshore Uruguay.
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(Originally published March 30, 2012, in Business News Americas.)