The Axis of Gas

Move over the "axis of evil". The time is ripe for the "axis of gas". Meet the Gran Gasoduto del Sur - the South American entry into Pipelineistan, soon to join networks from Siberia to both Europe and Asia as well as the American-inspired Baku-Tbilisi-Ceyhan pipeline. In terms of political will applied by the new axis of Caracas, Brasilia and Buenos Aires, the pipeline is already a done deal.

SAO PAULO – Move over the “axis of evil”. The time is ripe for the “axis of gas”. Meet the Gran Gasoduto del Sur (the Great Gas Pipeline of the South) – the South American entry into Pipelineistan, soon to join networks from Siberia to both Europe and Asia as well as the American-inspired Baku-Tbilisi-Ceyhan pipeline. In terms of political will applied by the new axis of Caracas, Brasilia and Buenos Aires, the pipeline is already a done deal.

At a recent summit meeting at a Sao Paulo hotel, presidents Hugo Chavez of Venezuela, Luiz Inacio Lula da Silva of Brazil and Nestor Kirchner of Argentina further progressed to consolidate the giant gas pipeline following “strategic lines of cooperation, integration and South American unity”, in the words of Chavez. All remaining South American presidents would be presented in August with definitive viability studies as well as alternatives for financing, he added.

The pipeline – with a daily capacity of 150 billion cubic meters – will snake from Puerto Ordaz in eastern Venezuela to Buenos Aires in Argentina. The main trunk line is estimated to be 6,603 kilometers – and the total length may peak at 9,283 km. The estimated cost is a staggering US$23 billion. The first phase – to Manaus, in the Amazon rain forest – would be ready by 2010. The last phase of the project would be finished by 2017.

Chavez is more than aware that “a global energy crisis is approaching. We in South America, what are we going to do? We can’t have nuclear power, otherwise they [the US] will bomb us.”

He praised Brazil’s biodiesel – green fuel – efforts. But the best answer for now, in his view, is gas; the formation of a South American energy grid – much as Iran, India and China are working for the emergence of an Asian energy grid. “Our energy equilibrium is here. We’re not going to be vulnerable any more.”

For the controversial Venezuelan president, the project is more than a pipeline; it means “hope for many people” as it also targets the key objective of “the fight against poverty and exclusion”. The project could possibly generate more than 1 million jobs.

Chavez bills ambitious projects such as the mega pipeline as “the only way towards our independence”. It’s the same approach regarding the bilingual, pan-South American TV network Telesur (financed by the governments of Venezuela, Argentina, Uruguay and Cuba); the proposed Petrosur (a pan-South American oil company); and the proposed common South American Bank, evidently divorced from International Monetary Fund/World Bank policies enshrined by the dreaded “Washington consensus”. He’s confident “there will be a flood” of investment in the pipeline, private and international.

Venezuela and Iran

Chavez’s stormy relationship with the Bush administration is obvious in much of what he says. For instance, he “never had any doubt” about the Iranian leadership’s assurances they only have a civilian nuclear program, he said.

“The US and Europe, they both have nuclear plants,” he said. “Brazil does too. Why cannot Iran or any other country? The American government was searching for an excuse, and is now preparing the ground for an intervention. [Venezuela] is in favor of a dialogue of civilizations.”

Chavez’s take is corroborated by recent revelations by General Lawrence Wilkerson, former chief of staff of former secretary of state Colin Powell. In May 2003, just after President George W Bush had pronounced “mission accomplished” in Iraq, the Iranian leadership asked the Swiss ambassador to Tehran to convey to Washington a request for talks.

Tehran would answer all American questions on its nuclear program; then sanctions could be lifted and normal relations established.

According to Wilkerson, his boss was in favor. But Vice President Dick Cheney wasn’t. Cheney and the neo-conservatives, said Wilkerson, then forced the State Department to ignore the Swiss ambassador and the Iranian request, and started to build up the demonization of Iran.

Meanwhile, Chavez said, Venezuela was at the heart of the South American mega pipeline from the beginning. “Then came Lula [da Silva]. We started to talk about it, and started to exchange information with Petrobras [the Brazilian oil and gas giant]. We wanted a strategic project of exploration. Not even we Venezuelans knew about our reserves.”

Officially, Venezuela holds gas reserves of 151 trillion cubic feet (compared to the US’s 189 trillion cubic feet); that means almost 50% of the reserves of the whole continent, 80% of South America’s reserves and, the president stressed, “5% of the reserves of the whole world”.

The gas will be sold in South America “very cheaply”, as Chavez confirms that Petroleos de Venezuela, SA or PDVSA, the Venezuelan oil and gas giant, is part of the pipeline project. “If Venezuela was only moved by an economic-financial interest, I wouldn’t be here; I would be in Washington,” he said.

He delights in quoting Venezuela’s oil reserves – “313 billion barrels” – adding that the days when the country “was an American oil colony” are over. Venezuela, he said, was “currently producing 3 billion cubic feet of gas a day”. But it is not exporting anything, at least not yet. “The first exports will be to South America,” then to friendly countries like China and India.

China was a preferential client of Venezuela’s oil, and the same would apply for gas, he said. “We are going to build a network going to Colombia, Equator and Chile, and a commission will inform Chile, Uruguay, Paraguay, Peru, Surinam and even France,” he said. “The project will be sustainable till the end of this century.”

The gas may be even sold in the end to the US, but for a much higher price, Chavez said. “[This] does not mean that we have a conflict with the American people. Our conflict is with “El Jefe [the boss, a reference to Bush] who wants to take over the riches of all the world.”

The pipeline project is gaining ground amid a complex political context in South America pitting two opposing trade and integration models. Venezuela has just entered Mercosur, the South American trade bloc led by Brazil and Argentina; technical discussions take place next month before full incorporation. This move implied Venezuela’s exit from the Andean Community of Nations, another trade bloc including Bolivia, Colombia, Ecuador, Peru.

After the failure of the American-led Free Trade Area of the Americas (FTAA) summit in Mar del Plata, Argentina, “the US started to strike mini-FTAAs in Central America or the Caribbean”, Chavez explained. As far as he’s concerned, an Andean community does not exist. He sees Venezuela’s exit “as a divorce. The two [Mercosur and the Andean Community] are incompatible. If a country in the Mercosur strikes a free trade agreement with the US, it has to leave. They are like water and oil.”

In the end, the pipeline reveals itself in Chavez’s mind to be just one among myriad development projects – not only for Venezuela but for the whole of Latin America.