Paraguay is looking to develop a $1.5bn gas pipeline that will connect with Argentina and Brazil, with energy companies and high-ranking government officials engaging in talks on the matter.

Senior government officials from Paraguay and Brazil told Reuters that the plan, which is being drawn up by Paraguay, aims to compete with a rival Bolivian bid to repurpose existing pipelines to transport Argentine gas to Brazil. Either one of the projects would result in a major shift in regional energy flows if realised.

Mauricio Bejarano, Paraguay’s Deputy Mining and Energy Minister, told Reuters: “We want to sign a memorandum of understanding at a presidential level (for the pipeline) in June. There is a general support for the project.”

Rodrigo Maluff, Paraguay’s Vice-Minister for Investment, said that Brazil is warming to the idea of gas coming from Argentina’s booming Vaca Muerta shale region via the Paraguayan Chaco, as declining gas flows from Bolivia are forcing it to look for alternative suppliers. He added that this re-routing would require $1.2–1.5bn of investment, part of which will need to come from the private sector.

The Paraguayan officials said that the pipeline’s initial capacity will be around 15 million cubic metres in the first stage.

Alexandre Silveira, the Brazilian Mines and Energy Minister, told Reuters that he supported Paraguay’s plan, but in order for it to materialise, further studies are needed.

“We agreed to set up another meeting with the private sector to better study the viability,” he said.

Plans seen by Reuters show that the pipeline will run from Campos Duran in northern Argentina to the Paraguayan border, then across the arid land of the Paraguayan Chaco to reach Brazil.

Since last year, governments and private companies from Argentina and Brazil have also engaged in talks with Bolivia to decide the cheapest way of transporting gas from Vaca Muerta to the north of the region, which will involve reversing the flow of Bolivia’s pipeline network.