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Leaders of Brazil, Bolivia reach energy deal on natural gas prices

Leaders of Brazil, Bolivia reach energy deal on natural gas prices
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First Published: Thu, Feb 15 2007. 11 15 PM IST
Updated: Thu, Feb 15 2007. 11 15 PM IST
AP
BRASILIA, Brazil: President Luiz Inacio Lula da Silva and Bolivian President Evo Morales reached a deal late Wednesday on how much Brazil will pay for Bolivian natural gas, apparently resolving an issue that has deeply divided the neighboring nations for a year.
After a marathon bargaining session, top Silva adviser Marco Aurelio Garcia told reporters a new pricing method was set and that the leaders would sign an agreement on the terms Thursday.
Garcia provided no details, but said Brazilian officials are “very satisfied with the agreements.” Brazilian Foreign Minister Celso Amorim said it is also possible that Brazil’s state oil company, Petroleo Brasileiro SA, may soon announce new investments in Bolivia, home to South America’s second-largest natural gas reserves after Venezuela.
Petrobras froze new investments after Morales last year announced plans to nationalize Bolivia’s energy production chain, and demanded a controlling stake in the operations of foreign companies that produce Bolivian natural gas.
Earlier Wednesday, Bolivian and Brazilian officials said Brazil will pay nearly 300 % more for the Bolivian gas it uses to produce electricity in the central state of Mato Grosso. That amounts to less than 10 % of the natural gas Brazil receives from Bolivia for power generation, fuel for cars and cooking gas.
Morales was scheduled to return to Bolivia before dark on Wednesday. But the visit extended into the night in Brasilia, resulting in the deal and the announcement that Morales would sign the agreement with Silva on Thursday.
Amorim said Brazil is trying to craft a new relationship with Bolivia after a year of tensions over the fuel that Latin America’s largest country imports from its Andean neighbor.
Petrobras has vast natural gas operations in Bolivia, and Brazil buys some 26 million cubic meters (918 million cubic feet) of Bolivian natural gas per day, paying slightly more than US$4 per million British thermal units on average. Bolivia wanted Brazil to pay about US$5 per million Btu after reaching a similar agreement with Argentina.
Brazil, South America’s biggest economy, is working to tap other sources of natural gas but it will likely be years before it weans itself from Bolivia.
Morales has said his country essentially “subsidizes” gas sales to Brazil, but Brazilian officials have long contended the current price was compatible with market prices.
Morales swept to power in 2005 as Bolivia’s first Indian president after promising to nationalize his poor nation’s energy industry. Last May, he sent troops to guard foreign gas production facilities after announcing his effort to assert state control over the entire chain of production.The two chiefs of state also were expected to sign agricultural accords, including deals to sell Brazilian foot-and-mouth vaccines and tractors to Bolivia.
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First Published: Thu, Feb 15 2007. 11 15 PM IST