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Brazil Braces for Cuts in Natural Gas From Bolivia

Posted on: Thursday, 21 July 2005, 03:01 CDT

As a precaution against further political unrest in Bolivia, where Congress on June 9 named Supreme Court President Eduardo Rodriguez to succeed Carlos Menas as president, Brazil's mines and energy ministry is drafting plans to reduce gas demand.

Brazil imports 24 million eu m/day of gas from Bolivia through a contract valid until 2019.This amount represents around 50% of the country's gas consumption.

Brazil's energy ministry said it will choose where to reduce gas flows until alternatives are found. About 75% of Bolivian gas exported to Brazil goes to Sao Paulo.

Analysts said that if gas rationing is required, cuts would be made first at refineries owned by Petroleo Brasileiro SA (Petrobras), which can run plants on both gas and oil. According to estimates, changing fuels at the refineries would save about S million cu m/day of gas.

Petrobras officials also are considering shutting down Brazil's 10 gasfired thermoelectric plants, which are responsible for 4.2% of Brazil's power generation and consume 7.5 million cu m/day of gas.

Halting the sale of gas for fueling vehicles would save an additional 4 million cu m/day of gas.

Protesters, led by indigenous groups, want Bolivia to nationalize local operations of foreign oil companies, including Petrobras (OGJ Online, June 7, 2005).They have seized a facility where liquids removed from natural gas before shipment to Brazil are stored. Without access to storage, production of gas may have to be reduced or stopped "within days," Petrobras officials said.

Rodriguez persuaded Indian and peasant leaders to grant his new government a grace period. Demonstrators lifted road blockades and left oil fields controlled by RepsolYPF SA and BP PLC.

So far, there has been no occupation of gas fields, but there were reports of attempts to take over pump stations near the major gas fields in the southern part of the country.

Peter Howard Wertheim

OGJ Correspondent

Copyright PennWell Publishing Company Jun 20, 2005

Source: Oil & Gas Journal

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