Bolivia wants changes to Brazil natgas contract

Thu Aug 20, 2009 6:17am IST

Bolivia wants more flexibility to diversify markets

* Brazil is Bolivia’s biggest natural gas buyer

By Julia Cortez

SANTA CRUZ, Bolivia, Aug 19 (Reuters) – Bolivia wants to change its natural gas supply contract with Brazil in order to become less dependent on its giant neighbor, the president of the state-run energy firm said on Wednesday.

YPFB President Carlos Villegas said the current export contract, which is valid for another 10 years, is not in Bolivia’s best interests because it makes the Andean country vulnerable to sharp fluctuations in Brazilian demand.

“We should protect the interests of Bolivia, YPFB and of the private companies and with that in mind we’ve started and we’re going to continue to work on the possibility of reforming the contract with Brazil,” Villegas said.

He said a new contract should aim to give Bolivia more flexibility to sell natural gas to other markets, which might eventually include Uruguay and Paraguay. Argentina is currently the second-biggest consumer of Bolivian natural gas.

“We can’t live with the uncertainty that we’ve got at the present time,” said Villegas, referring to Brazilian demand for the fuel, which has varied between 21 million cubic meters and 31 million cubic meters per day in recent months.

“We want to guarantee new markets and that’s what we’re aiming for,” he said.

Villegas’ comments at an industry gathering in the city of Santa Cruz came ahead of weekend talks between Bolivia’s leftist president, Evo Morales, and Brazilian President Luiz Inacio Lula da Silva that are expected to cover energy trade.

Bolivian gas sales to Brazil reached a record $2.85 billion last year when average daily supply was 30 million cubic meters and prices were above $7 per BTU.

However, the impoverished Andean country has been hard hit by falling prices and slacker demand from Brazil due to an economic slowdown. Gas sales are expected to fall 30 percent this year.

Morales nationalized Bolivia’s key natural gas industry soon after taking office in 2006. (Additional reporting by Carlos Quiroga; Writing by Helen Popper; Editing Bernard Orr)

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