Brazilian Industry Braces Itself for Drastic Price Increases in Bolivian Gas

Brazil’s all powerful industrial lobby doubts that Bolivia will remain a reliable supplier of natural gas in the wake of the country’s decision to nationalize hydrocarbons’ resources.

São Paulo’s Federation of Industries, FIESP, said the Bolivian nationalization process could have drastic consequences for the Brazilian market.

"In the medium and long term there will be a serious problem in the supply of gas, since many industries depend on Bolivia and we don’t know how negotiations will end," Fiesp energy analyst Luiz Gonzaga Bertelli told reporters.

São Paulo state, the powerhouse of Brazil, which generates a third of Brazil’s GDP, depends on Bolivia for 75% of its natural gas. Any supply interruptions will have a greater impact on industrial users than on consumers who use natural gas to cook or power their vehicles, Fiesp said.

Two other Brazilian states, Mato Grosso and Mato Grosso do Sul, receive 100% of their gas from Bolivia, and Rio Grande do Sul 75%.

São Paulo business leaders fear Bolivia will impose a drastic price increase on the gas it sells to Brazil, currently at US$ 3.25 per million British Thermal Units. Officials from Bolivian President Evo Morales administration often point out that natural gas fetches 7 US dollars per 1 million BTU on world markets.

But Petrobras, the Brazilian state-owned giant that holds (held?) the biggest gas concessions in Bolivia, says that the US$ 7 applies to liquefied natural gas shipped over long distances by sea, a line of business unavailable to landlocked Bolivia.

Petrobras CEO Sergio Gabrielli said recently that the company will depend on natural gas from Bolivia until at least 2010.

However the chairman of Brazil’s National Confederation of Industry, Armando Monteiro Neto, downplayed concerns about a possible gas cut-off recalling that Bolivia’s "income depends to a great extent" on providing fuel to Brazil.

But amid the complaints and gloomy predictions from Brazil’s business community, the leader of the oil workers union in São Paulo offered support for Morales’ decision to nationalize hydrocarbons’ resources.

"If Brazil can have control of its petroleum (via Petrobras), why not Bolivia?" asked union chief Antonio Carlos Spis.

Mercopress – www.mercopress.com

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