Brazilian study urges Petrobras to cut Bolivian natural gas purchases

6/28/2017

RIO DE JANEIRO (Reuters) — Petróleo Brasileiro SA should cut the maximum amount of natural gas it buys from neighboring Bolivia in half in an effort to encourage domestic importers and distributors to enter the market, according to a Brazilian government study.

The study by a Mines and Energy Ministry research arm, seen by Reuters on Tuesday, recommended that Brazil's state-owned oil firm cap gas purchases from Bolivia's Yacimientos Petrolíferos Fiscales Bolivianos SA at 16 MMcmd of gas.

Petrobras, which financed and built the pipeline on both sides of the border and is the exclusive Brazilian distributor of Bolivian gas, is allowed to buy up to 30.1 MMcmd of gas under the terms of its current contract with YPFB. That contract expires in 2019.

The study argues that the 14 MMcmd in additional gas could be made available to other companies through an expansion of the market in states like São Paulo, Parana, Santa Catarina and Rio Grande do Sul.

The ministry did not have a comment on the study.

Brazil and Bolivia have locked horns for about a decade over their gas dealings. Brazil has sought ways to cut its dependence on purchases of Bolivian gas since Bolivian President Evo Morales seized Petrobras' gas assets in May 2006.

In February, Petrobras said it had cut gas imports from Bolivia to about 45% of the daily maximum volume established with YPFB, due to falling demand and rising domestic supply. That drove Bolivia to seek new Brazilian buyers.

Bolivia began supplying natural gas to Brazil in 1999 through the Bolivia-Brazil Gas Pipeline commonly known as Gasbol.

Reporting by Rodrigo Viga Gaier; Writing by Alexandra Alper; Editing by Guillermo Parra-Bernal and Paul Simao