Bolivia Will Stop Selling Cheap Gas to Brazil and Argentina

The Bolivian government ratified Tuesday, February 21, its decision to increase the price of natural gas exported to Brazil and Argentina because it considers them "unfair".

Hydrocarbons minister Andres Soliz and the president of Bolivia’s oil company (YPFB) Jorge Alvarado made the official announcement in La Paz.

Currently Brazil pays Bolivia US$ 3.23 for each million BTU and Argentina US$ 3.18. According to a common rule of thumb,  natural gas prices follow the 10-to-1 rule in relation to crude oil, meaning that the price of the gas would be 10% of the crude oil price.

With a oil barrel priced at over US$ 60 these days, Brazilians and Argentineans would be heavily underpaying with a hefty close to 50% discount off the market price.

"Bolivia has all the right to demand negotiations for better prices with the countries we’re supplying with our natural gas", said Mr. Alvarado.

"We consider current prices to be unfair and must necessarily be reviewed", added Mr. Soliz.

Both officials added that following talks with Venezuela’s Minister of Energy and Petroleum, Rafael Ramirez, it was quite clear that "Venezuela will not supply subsidized gas to Brazil and Argentina," as was advanced by the Brazilian press.

In an official release from Caracas, Venezuela’s Hydrocarbons Minister denied his country had offered subsidized natural gas to Brazil adding it was a "misinformation" and that when the giant pipeline extending throughout South America is finished, "Venezuelan gas will cost US$ 5 per million BTU".

"This is only part of a stage of pressures to try and "soften" Bolivia when President Morales is about to begin gas price negotiations with its neighbours", said YPFB president Jorge Alvarado.

As to the future prices for natural gas, "it would be a gross mistake to advance through the press the prices from which we are willing to begin negotiations with neighboring countries".

However Mr. Soliz was cautious as to the coming price negotiations for natural gas since Brazil has offered to jointly build a huge petrochemical complex in the Bolivian/Brazilian border, which "we have to be careful is not tied to frozen gas prices".

"We’re always tempted with great offerings for the future, but…currently it seems they might be trying to extract disadvantageous prices for Bolivia. So that’s why we have to be careful at present and in the future", highlighted Mr. Soliz.

As to the energy sector in Bolivia, Mr. Soliz said that the President Evo Morales administration will not sign any documents or fix prices, "until the rules of the game have been reviewed" in the hydrocarbons sector.

The President has promised to respect foreign corporations’ assets, but insists in a greater government control over the country’s natural gas reserves.

Bolivia’s reserves are the second most important in Latinamerica behind Venezuela’s.

Mercopress – www.mercopress.com

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