Bolivia and Brazil at Impasse Over Gas. Brazilians Brace for Higher Prices.

It is expected that the price of natural gas in Brazil will be more expensive soon following the decision by the government of Bolivia to increase the price again of the gas it exports.

The president of Petrobras, Sérgio Gabrielli, declared that the announced price increase will have an important impact in Brazil, but that Petrobras, which has large investments in Bolivia, is willing to negotiate a solution.

Gabrielli reports that at the moment negotiations with the state-run Bolivian oil company YPF (Yacimientos Petroliferos Fiscales) have come to a standstill, but that Petrobras wants talks to resume as soon as possible.

Gabrielli explained that the talks are slow because they involve a detailed analysis of contracts and technical discussions.

The president of Bolivia, Evo Morales, will be in Brazil this week at a meeting of the Interamerican Development Bank in Belo Horizonte. It is expected that the issue of Bolivian gas exports to Brazil will be discussed with him.

Meanwhile, Gabrielli explains that as Bolivian gas supplies slightly more than half the demand in Brazil at the moment, any problems in Bolivia will have an immediate impact. "A crisis in Bolivia means an important impact on the gas supply in Brazil.

Petrobras is very active in Bolivia where it has invested US$ 1.5 billion over the last decade. In 2005 Petrobras operations in Bolivia were worth US$ 600 million.

Petrobras controls 45% of that country’s gas fields and owns its two biggest refineries. It also pays some 30% of Bolivia’s total tax revenues. On the other hand, Brazil imports two thirds of Bolivia’s gas exports.

Petrobras has contracts with YPF for natural gas that stretch until 2019. The contracts have clauses permitting price adjustments. Since September 2005, there have been three price adjustments of 13% , 10% and 14%.

Agência Brasil

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