MercoPress. South Atlantic News Agency

Brazil's Bolivian gas bill could double

Bolivia will be asking Brazil to pay eight US dollars for the natural gas it pumps at a rate of 27 million cubic metres per day, according to a report Tuesday from the Bolivian Information Agency.

President Evo Morales is scheduled to meet his Brazilian counterpart Lula da Silva during the Mercosur gathering in Caracas this week when Venezuela will officially begin the process of full membership of the South American customs union. Mercosur full members are Argentina, Brazil, Paraguay and Uruguay.

Brazil currently pays 3.40 US dollars for every thousand BTU (British Thermal Units), and this is the first time that Bolivia officially floats the new price it will be demanding since the country took over all hydrocarbons resources and industry assets last May 1.

Bolivia's Energy Minister Solíz said that the eight US dollars price includes a 50 US cents "environmental fee".

"We're asking from Brazil 7.50 US dollars as the basis for negotiation because the prices basket in Sao Paulo indicates that's the value of Bolivian natural gas, so we're asking from Brazil market price", said Solíz.

However this is higher than the price agreed last week with Argentina, five US dollars for every 1.000 BTUs, and which was stamped by presidents Morales and Nestor Kirchner in a meeting in Buenos Aires.

Actually Bolivian natural gas price negotiations begun three months ago but were frozen following the nationalization of hydrocarbons resources and a pending Brazilian debt from an export contract dating back to 1999.

Under the "take or pay" clause, between 2000 and 2005, Brazil did not consume the energy volume agreed and therefore according to Bolivia has an accumulated debt of 450 million US dollars.

Bolivia has been insisting on an update for natural gas prices since Morales became president last January. Morales has a backlog of social advancement programs to deliver which he expects to finance with the additional income from the country's sale of natural gas to Argentina and Brazil.

Bolivia sells Argentina 7.7 million cubic metres per day and of next July 15 will be paying 5 US dollars per thousand BTU. However at the end of the year a new contract and conditions has to be agreed.