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Bolivia Is Making More Than They Ever Dreamed Selling Gas to Brazil, Says Petrobras

Brazilian President Luiz Inácio Lula da Silva inaugurated Saturday, June 10, the lay out of a gas pipeline that will connect the southeast with the northeast of the country, in another step to ensure energy independence.

"This gas pipeline is the answer. We do not want to be dependent either on Bolivia or United States." Lula said at the inauguration of the pipeline construction works in the city of Serra, next to Vitória, capital of Espí­rito Santo state.

Since Bolivia’s President Evo Morales nationalized hydrocarbons resources (including Petrobras assets) Brazil has speeded up plans to achieve energy self-sufficiency.

Brazil currently imports 60% percent of the natural gas it consumes from Bolivia which is transported through a 3.200 kilometers long pipeline.

The new 300 kilometers long pipeline will connect the cities of Vitória with Cabiúnas in neighboring Rio de Janeiro state. It is scheduled to be finished by October 2007.

The projected capacity of the pipeline is 20 million cubic meters of gas per day and is the first leg of a much more ambitious project, the Southeast-Northeast Gas Pipeline, or Gasene, which will be 1.371 kilometers long when finished.

Brazil’s government owned Oil Company Petrobras and China’s Sinotec, after long discussions, are partners in the Gasene project.

"We had two years of hard work with the Chinese to set up this association. But now we are going to pump Espí­rito Santo gas to northeast Brazil helping to create thousands of jobs, directly and indirectly", insisted Lula.

"China and Brazil have key roles to play in joint ventures," because both countries "currently are poised to develop leading positions in business, in development and trade relations", added the Brazilian president.

Petrobras has plans to invest 16 billion US dollars in the next four years to ensure a sustainable supply of domestic natural gas, of which some 5.2 billion are earmarked for new gas pipelines, including the Southeast-Northeast project.

In related news and form São Paulo Petrobras gas and energy general manager Ildo Sauer warned that if an agreement on the price for natural gas supplied by Bolivia to Brazil is not reached, "we will appeal to international arbitration".

"If they request a higher price than contemplated in the contract, we’re going to analyze the situation and show them why we disagree. And if we can’t agree we will appeal to international arbitration, a process that can involve months, years", said Sauer.

The Brazilian official described Bolivia’s intention of having an automatic adjustment of gas prices every three months an "unviable pretension".

"I can’t see how we can concord with such an increase. They are making ample money with the current contract, far more than they ever dreamt of".

According to Sauer when the contract was signed in 1996, Bolivia was making almost one US dollar for each BTU.

"Now they are making over four dollars. If with one dollar business was viable, and profitable, imagine with four dollars. For us is not a bad contract, but for them (Bolivia) it’s far better than for us", emphasized Sauer.

Mercopress – www.mercopress.com

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  • Show Comments (3)

  • Guest

    The only way that Boliva can get money for its gas is to sell it. The Bolivian president wants money. Bolivia does not have any ocean ports nor facilities to liquify the gas for oceangoing shipping.
    The only real market that Boliva has for its gas is Brazil and Argentina. If these countries hold the line on a reasonable price, then Bolivia has only two choices, the reasonable price or nothing. When the government gas facilities were sold to the private sector in the 1990’s part of the proceeds was put into a trust to pay the pensions for Bolivian workers.Besides nationalizing the gas facilities Morales is trying to raid that trust fund.
    He wants money really bad, so if his only major customers, refuse to pay more than a fair price, all he can do is accept the fair price or sit on his countries gas and get no money. I applaud Petrobras for standing up to and oposing the extortion tactics of Morales. Nationalization is just a pretty name used for theft when a government is doing the stealing.

  • Guest

    What??
    The poster above is talking about “International Market Price” for gas. He misses the point that Petrobras has invested Billions of dollars to be able to get the gas. The market price would be fine if Bolivia had done all the infrastructure work and just shipped it to Brasil. Obviously, Petrobras or any other investor is entitled to make back their investment (with interest) and to make a profit from their investment. And now in the future, any investor would also be entitled to a premium for the Risk of doing business in Bolivia, as demonstrated by the government’s actions.

  • Guest

    ?????
    Well…welll….may be Sauer is not aware that the price of natural gas went up since 1996.
    And may be that Sauer is also not aware that the price you are paying is not the International market price.

    If you disagree to buy natural gas at the market price then why dont you sell your agricultural products at 30 or 40 BELOW the International market price ?

    That would be fair….based on your philosophy !

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