MercoPress. South Atlantic News Agency

Bolivian gas test for Argentina/Brazil presidential summit

Argentina may apply pressure on local units of Brazil's government owned Petrobras in a battle to increase its share of Bolivian natural gas supplies and ease potential wintertime shortages, reported on Thursday Buenos Aires daily, Clarin.

The government will review natural gas supplies to Petrobras Argentine petrochemical plants if Brazil does not agree to let Argentina have more natural gas from Bolivia, Clarin published on Thursday. Brazilian president Luiz Inacio Lula da Silva is scheduled to begin Friday an official visit to Argentina and on Saturday will meet with President Cristina Fernandez de Kirchner and Bolivian leader Evo Morales which supplies both countries with natural gas but has a limited production capacity. "If Brazil cannot cut its natural gas demands by 2 to 3 million cubic meters a day to redirect that amount to Argentina, the government will not have any option but to review local petrochemical businesses where Petrobras is a big natural gas consumer" an unnamed source at the Planning Ministry told Clarin. On Wednesday Brazil made public its stance on the issue. Lula da Silva spokesperson Marcelo Baumbach said that "Brazil's priority is the domestic market and therefore has no possibility of reviewing the volume already set in the contract", in reference to the 30 million cubic meters that are pumped daily from Bolivia to Sao Paulo. Petrobras has a petrochemical complex in Argentina, as well as a fertilizer plant and a polystyrene plant. Five years of booming economic growth have expanded power demand in Argentina, where the electricity supply is highly dependent on natural gas for thermal generators. Argentina supplies most of that but there are fears that, if Bolivian supplies continue low, the country will face energy shortages during the southern hemisphere winter in June and July. Bolivia has said it will not be able to meet fully its export commitments to neighbors Argentina and Brazil until 2009. Bolivia currently supplies Brazil with about 28 million cubic meters of gas and needs 6 million to 7 million cubic meters a day for its domestic market. Natural gas exports to Argentina are well below the current maximum contract level of 7.7 million cubic meters per day. Last week Bolivian Vice President Alvaro Garcia Linera visited Brazil and essentially said Brazil and Argentina must sort out between them how to divide up Bolivia's natural gas exports. The Saturday summit between the three leaders in Buenos Aires should give a clear lead as to the outcome.