Bolivia Wants to Hike by 65% the Price of the Gas It Sells to Brazil

Bolivia is aiming to raise prices on its natural gas exports to Argentina by up to 65 percent, its planning minister said in an interview with a leading Argentine newspaper on Sunday.

Bolivian President Evo Morales nationalized the Andean country’s energy sector last week and has said he is seeking to increase prices on Bolivia’s natural gas exports to its biggest customers, Brazil and Argentina, to generate more revenues.

In an interview with the Buenos Aires daily La Nación, Bolivian Planning Minister Carlos Villegas said the government is looking to raise prices to $5.50 per million British Thermal Units (BTU) from the current price of $3.35.

"We can’t go substantially lower than that," Villegas said. "But this is a negotiation, and we still don’t know exactly how much the price increase will be."

Brazil and Argentina have relied on cheap Bolivian gas imports to fuel their economies. Argentine President Nestor Kirchner is particularly concerned about any impact from potential price hikes as he struggles to contain double-digit inflation at home.

Brazil’s oil state-owned company Petrobras has been operating in Bolivia since 1995. At the moment, it accounts for around 20% of total foreign investments in Bolivia and its tax revenues 18% of the country’s GDP.

Between 1997 and 2000, Petrobras built the Bolivia-Brazil gas pipeline, which can transport up to 30 million cubic meters of natural gas per day. The pipeline runs for over 3,100 kilometers, almost 2,600 in Brazil.

It begins in Santa Cruz de la Sierra, Bolivia, crosses parts of the states of Mato Grosso do Sul, São Paulo, Paraná, Santa Catarina and Rio Grande do Sul.

It passes through the cities of São Paulo, Curitiba and Porto Alegre. The area it serves is where over 70% of electricity consumption, 80% of industrial output and 75% of GDP is concentrated in Brazil.

In an energy summit on Thursday, May 4, Morales met with Argentine President Nestor Kirchner and Brazilian President Luiz Inácio Lula da Silva and agreed to negotiate prices instead of unilaterally increasing them.

Argentine officials say they expect to begin formal negotiations over gas prices in the coming weeks.

Bolivia, South America’s poorest country, is home to the region’s second-largest natural gas reserves after Venezuela.

Morales’ move to nationalize the energy sector forces foreign-owned companies to turn over their production to a state-owned energy company. It also raises taxes on international energy firms operating in the country.

Mercopress – www.mercopress.com

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