Aug. 24 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, said plans to build a $20 billion natural gas pipeline from Venezuela to Argentina are on hold because of an impasse between Brazil and Bolivia over energy prices.

A feasibility study of the 10,000 kilometer (6,215 mile) pipeline that was scheduled for delivery next month won't be ready for at least a year, Ildo Sauer, gas unit chief of Petrobras, said in an interview at his office in Rio de Janeiro. The pipeline is a key part of Venezuelan President Hugo Chavez's goal of integrating Latin American energy resources.

Work stalled after Bolivian President Evo Morales seized the assets of Petrobras and other foreign oil companies May 1 and called for a doubling of gas prices, Sauer said. To cut reliance on Bolivia, the source of half of Brazil's supply and a key ally of Chavez, Petrobras is raising domestic gas output and seeking imports from such countries as Nigeria.

``The technical and environmental studies advanced a great deal last year but have lost steam since the Bolivia imbroglio over the natural gas contract,'' Sauer, 52, said. ``So what we planned on concluding around now will be delayed by about a year.''

The pipeline would tap Venezuela's 151 trillion cubic feet of natural gas reserves and supply Brazil and Argentina at first, and then run to Uruguay, Paraguay and possibly link up with existing pipelines in Bolivia. It would go online between 2013 and 2015, Sauer said.

Sauer said estimates have placed the cost of the project at around $20 billion and that ``big international partners'' such as OAO Gazprom, the world's largest natural-gas producer, are interested in the project.

`Stumbling Block'

``Doing the math, this project is economically and technically viable,'' Sauer said. ``The main stumbling block, like with the issue in Bolivia, is political.''

He added that Bolivia's entrance into the project is a factor delaying the feasibility studies. Bolivia formally joined Venezuela, Brazil and Argentina in late June, saying the nationalization of its energy industry would not undermine its commitment to the regional energy integration project.

Ministers from Argentina, Bolivia, Brazil and Venezuela were set to review the pipeline studies in a meeting in September. Carlo Ibere, a spokesman for Brazilian Energy Minister Silas Rondeau, said the gathering hasn't been confirmed.

A spokesman for Caracas-based Petroleos de Venezuela SA declined to comment on the delay. Alfredo Scoccimarro, spokesman for Argentina's Energy Secretariat, also declined to comment.

Liquefying Plants

Petrobras is also considering a plan to buy or build plants that would transform gas into liquid to be shipped to ports in Brazil, Sauer said. The company on Aug. 1 said it's planning to complete two re-gasification floating plants in Brazil by February 2009 to process 20.5 million cubic meters of liquefied gas a day.

``The pipeline and the liquefied natural gas projects compliment each other, and we have the economic and technological means to carry out both if we so decide,'' Sauer said.

Firm demand from southern Venezuela and northern Brazil, big mining production areas, and from Brazil's central areas, where most of the country's soy is produced, would justify the construction of the pipeline, he said. Variable demand from areas near Brazil's coast would be supplied by liquefied gas that would arrive by ship to re-gasification plants, he said.

Petrobras in June said it would increase investments from 2006 to 2011 by two-thirds to $87.1 billion. Of that total, planned investments of $22.1 billion through 2011 by Petrobras and partners such as Exxon Mobil Corp. would cut dependence on Bolivia to 30 percent of the country's gas needs, Sauer said.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

Last Updated: August 24, 2006 15:27 EDT