No Gas, Brazil Tells Argentina. But You’ll Get a Little Electricity

Electricity in Brazil Brazilian President, Luiz Inácio Lula da Silva, said this Saturday, February 23, in Buenos Aires that Brazil cannot spare any of the gas it has previously bought from Bolivia, but stressed that his administration will not leave Argentina without assistance as asked by that Mercosur country. Instead of gas Argentina will get electricity from Brazil, Lula guaranteed.

The leaders of Brazil, Argentina (president Cristina Fernandez de Kirchner) and Bolivia (Evo Morales) met for about two hours in the Argentinean capital to discuss the energy problems Buenos Aires has been facing. Lula also informed that in 10 days the energy ministers of the tree countries will be meeting to discuss how to find new ways to develop energy sources for the region.

Bolivia supplies Brazil and Argentina with natural gas but the country has a limited production capacity.

"We will contribute to lessen this difficulty, as much as we can, without transferring the natural gas but making energy available if we have enough to provide it. We will offer them a limited amount of  energy and will also be repaid in energy whenever they can do it," Brazil's Mines and Energy minister,  Edison Lobão, explained.

Argentina asked Brazil for one million cubic meters of gas/day plus electric energy, Lobão explained. That was the same help Brazil gave Argentina last year. This year, however, Brazil says it can't be too generous and the aid will be limited to 200 megawatts/hour of electric energy.

Lula told reporters that South American countries have to be solidary since they are supposed to grow between 4% and 8% this year and need all the energy they can get.

"I think," said the Brazilian president,  "that this solidarity policy is extremely important in order to assure investors who wish to invest in our countries of our continuous capacity to produce energy."

"Argentina's economy has been growing 8%, the Brazilian one 5%, and Bolivia's 4% or 5% . All of us are going to need more energy, and, therefore, we have created a group of three ministers from the three countries so that we can not only discuss about gas during the winter season, but also can discuss how to get new sources to produce the energy we need," added Lula.

Argentina has applied pressure on local units of Brazil's government owned Petrobras in a battle to increase its share of Bolivian natural gas supplies and ease potential wintertime shortages.

Before the summit meeting, an unnamed source at Argentina's Planning Ministry had told Argentinean daily Clarin: "If Brazil cannot cut its natural gas demands by 2 to 3 million cubic meters a day to redirect that amount to Argentina, the government will not have any option but to review local petrochemical businesses where Petrobras is a big natural gas consumer."

Petrobras has a petrochemical complex in Argentina, as well as a fertilizer plant and a polystyrene plant.

Last week, Lula's spokesman, Marcelo Baumbach, had said that "Brazil's priority is the domestic market and therefore has no possibility of reviewing the volume already set in the contract", in reference to the 30 million cubic meters that are pumped daily from Bolivia to São Paulo.

Five years of booming economic growth have expanded power demand in Argentina, where the electricity supply is highly dependent on natural gas for thermal generators. Argentina supplies most of that but there are fears that, if Bolivian supplies continue low, the country will face energy shortages during the southern hemisphere winter in June and July.

Bolivia has said it will not be able to meet fully its export commitments to neighbors Argentina and Brazil until 2009.

Bolivia currently supplies Brazil with about 28 million cubic meters of gas and needs 6 million to 7 million cubic meters a day for its domestic market. Natural gas exports to Argentina are well below the current maximum contract level of 7.7 million cubic meters per day.

Last week Bolivian Vice President Alvaro Garcia Linera visited Brazil and essentially said Brazil and Argentina must sort out between them how to divide up Bolivia's natural gas exports.

Bzz, MP

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