France's Total could start the second phase of its Incahuasi gas project in Bolivia as early as 2017 if the right market conditions and incentives for investments are in place, the company's director for the Americas said on Sept. 16.
The $1.2 billion Incahuasi gas and condensate project, which will officially be inaugurated on Sept. 16, began production at three wells in August.
Total plans to increase output to more than 7 million cubic meters per day (Mcm/d) of gas by the end of September, about 10% of Bolivia's production, from 5.2 MMcm/d as soon as a compressor is added to increase pressure, Michel Hourcard told Reuters.
He added that good quality condensate--the liquid byproduct of gas that can be made into motor fuels--was also being shipped from Incahuasi, helping to generate cash.
"We are preparing assessment for phase two of the project. We have said that we will carefully monitor the performance of the field. Depending on the market and conditions in Bolivia, we will be ready to launch Phase Two in early 2017," he said.
According to Hourcard, Total hopes that the same conditions that existed during the completion of Phase One--conditions under which it was able to control costs and complete Phase One within budget during the prolonged period of low oil prices--will still exist. During this period of low oil prices, companies have slashed investments and suspended projects, Hourcard said.
"There is no magic recipe. There is no hope for projects if we cannot control costs in everything, especially with oil below $50 per barrel," he said.
The government under Bolivia's President Evo Morales said Total has committed about $800 million for Phase Two.
Incahuasi is expected to reassure the market regarding the Andean nation's ability to meet demand for both exported gas and internal gas.
The project is operated by Total, which owns 50%, alongside partners Gazprom with 20%, Tecpetrol with 20%, and YPFB Chaco with 10%.
Hourcard said about 90% of the gas from Incahuasi was destined for export, mostly to Argentina and Brazil via a 100 kilometer pipeline.
Argentina Gas Debate
Hourcard said that Total and other companies were in talks with the government in Buenos Aires, Argentina, to bring more projects onstream, but that will depend on the price of gas. This has become a hot political issue, and Argentina's Supreme Court ruled in August that the government must hold public hearings before reducing home heating gas subsidies.
Hourcard said Argentina was in need of gas despite its vast resources, including the Vaca Muerta Shale reserves that are considered the world's second-largest after those in the U.S.
"The need for Argentina to develop its own gas resources does not wipe out the need for additional gas from the outside, and a stable source of gas from Bolivia to Argentina is something that is solid, and we are happy to have found Incahuasi, which will help stabilize the market," Hourcard said.
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