BUENOS AIRES -- Argentine President Carlos Menem and his Chilean counterpart Patricio Aylwin inaugurated a crude oil pipeline Tuesday linking western Argentina with the Chilean port of Talcahuano.
Argentine officials said the 100,000-barrel-a-day pipeline should boost Argentina's annual crude sales by $500 million while Chile will benefit from cheaper crude.
The oilduct cuts out the cost of delivery by sea of current oil imports from Venezuela or Saudia Arabia.
Chilean Mining Minister Alejandro Hales said the new link that cuts across the Andean mountain range should increase trade between Chile and Argentina by 40 percent.
The 256-mile (425-km) long pipeline cost $220 million to build and took two-and-a-half years.
A quarter of the crude passing through the pipeline will go to the Chilean refinery at Talcahuano, run by the Chilean state oil company Empresa Nacional de Petroleo (ENAP).
The rest will be sold directly by the Argentine oil firm Yacimientos Petroliferos Fiscales, or YPF, to Pacific Rim clients. The crude will come from YPF's oilfields in Puesto Hernandez in Western Neuquen province.
The project was originally handled by ENAP and YPF, with the Chilean firm paying for $105 million of the cost and YPF paying the rest. In the interim the Argentine government divested more than half of the shares in YPF, a sell-off that did not affect the pipeline accord.
The two countries have also agreed to build a huge natural gas pipeline, although the gas project was secondary to the start up of the oil duct.
The gas pipeline will be constructed and operated by private companies. The consortium formed by Tenneco of the United States and British Gas is expected to start that project in two years.
