MercoPress. South Atlantic News Agency

Argentina and Brazil worry over Bolivia's limited gas supply

Brazilian Mines and Energy minister Nelso Hubner proposed a tripartite meeting with Argentina and Bolivia to ensure the supply of Bolivian natural gas for the two main economies of South America highly energy dependent of their inland resource-rich neighbor.

The purpose of the meeting is to organize and better improve the provision of natural gas to Argentina and Brazil according to the needs of each country along the year so as to balance the peaks of consumption. Last week Bolivian president Evo Morales admitted that his country would not be able to honor its gas provision contracts with Argentina and Brazil in the next twelve months. Morales made the admission during the announcement of significant private sector investments in the oil and gas industry totaling almost a billion US dollars in the next twelve months, but underlined they will not have an immediate impact on a production increase. Last December Brazilian president Luiz Inacio Lula da Silva announced the resumption of Brazilian investments in Bolivia which had been paralyzed since the Morales administration has decided, in May 2006, the nationalization of Bolivia's hydrocarbons. In his December 16 visit to La Paz President Lula da Silva signed five cooperation agreements among which Petrobras one billion US dollars investments in the Bolivian oil industry in the next four years. "At the end of the year we'll be producing 42 million cubic meters per day of gas which will not be enough to comply with the contracts we have with Argentina and Brazil", said the Bolivian Hydrocarbons minister Carlos Villegas. Current Bolivian production is in the range of 40 million cubic meters, and domestic and international demand stands at 46 million cubic meters. According to minister Villegas Bolivia must pump 31 million cubic meters per day to Sao Paulo, has a domestic consumption in the range of 5.5 to 6 million cubic meters and the rest is sold to Argentina. On several occasions during 2007 Bolivia was unable to honor contracts with Brazil and Argentina given the lack of essential investments, following the May 2006 nationalization. At the worst moment Bolivia was pumping to Argentina 2.6 million cubic meters per day when the original contract was for 7.7 million, although later reduced to 4.6 million cubic meters. President Morales said he understands Brazil and Argentina's concern and announced his willingness to find a "certain balance" in the provision of natural gas to Brazil and Argentina, but "fundamentally we must not distract ourselves from our commitment to the domestic market".