Brazil has reduced its demand for Bolivian natural gas to 24 million cubic meters per day, prompting a drop in production, according to reports in the La Paz press.
After requiring 30.2 million cubic meters of gas at the beginning of the month, Brazilian demand oscillated between 24-26 million cubic meters in subsequent days falling as low as 21 million cubic meters last weekend, said industry sources.
It is expected that Bolivia will send an average of 24 million cubic meters of natural gas per day to Brazil, or the minimum amount stipulated in their bilateral contract.
Brazil needs less Bolivian gas because it is producing more natural gas at home and also has built two liquefied natural gas (LNG) re-gasification terminals in the country's northeast capable of receiving LNG from any part of the world.
Those plants were built partly in response to Bolivia's move in 2006 to nationalize its energy reserves and raise the price it charges Brazil for natural gas.
When Brazil requires less natural gas, Bolivia tends to increase sales to Argentina to the full 7-million-cubic-meter capacity of the natural gas pipeline connecting those two countries.
However, the Argentine market currently is demanding just 6 million cubic meters per day, while between 6 million and 8 million are destined for the Bolivian domestic market.
In total, Bolivia is producing around 38 million cubic meters of gas per day, compared with the more than 40 million it was producing at the start of July.
Bolivian state-run energy firm YPFB announced that the drop in Brazilian demand for gas affects domestic fuels production and therefore Bolivia is being forced to import not only diesel but also gasoline and liquefied petroleum gas.
Bolivia's natural gas exports fell 25.6% in the first five months of the year compared with the same period last year mainly because of the drop in Brazilian demand.