MercoPress. South Atlantic News Agency

Gas: Bolivia advised to renegotiate with Brazil and sell more to Argentina

The gas Bolivia should be selling to Argentina is in Brazil at a bargain price stemming from a deal signed by former President Áñez, Balanza explained.

While the Bolivian state-run YPFB is yet to report on any progress regarding payment conditions with Brazil for gas sales or the signing of the sixth addendum to the export contract with Argentina, hydrocarbon analysts have insisted on the need to roundup these negotiations given the current situation stemming from Russia's invasion of Ukraine.

Under then-President Jeanine Áñez, Bolivia signed in 2020 the eighth addendum to the gas export contract with Brazil, amid the coronavirus pandemic and in price conditions that are not as optimal as those currently available on the market.

Economist Jaime Balanza pointed out that the conditions established in this addendum represent an “economic damage” to the country of up to US$100 million per year, due to a “disguised reduction” in gas export prices to Brazil.

“Export volumes were lowered and the gas delivery point was changed by 570 kilometers, which Bolivia must pay for. This generates enormous economic damage to the General Treasury of the Nation, to the governorships, municipalities, and the entire university system,” Balanza was quoted by Los Tiempos as saying.

He added that YPFB may annul this addendum and thus have more volumes to supply the Argentinean market. However, he said that the Brazilian market should not be completely closed, which could remain open for sporadic shipments of remaining gas.

“The volumes that we should be sending to Argentina are now in Brazil because they were shipped to that market, constituting the greatest economic crime against the country's interests,” Balanza said.

Hydrocarbons analyst Álvaro Ríos assured that a contract with Brazil cannot be canceled unilaterally, as this is the only guaranteed market for Bolivia for at least the next 10 years since Argentina will no longer depend on Bolivian gas once it develops the infrastructure to supply the north of this country with the Vaca Muerta fields.

However, Ríos did admit it was possible to negotiate better conditions in prices with Brazil through dialogue since now the conditions in the international market have changed with the war in Ukraine. “The State's faith is in honoring its contracts, so they cannot be cut,” he explained.

Gasoline and diesel imports have cost Bolivia around US$ 2.1 billion in 2021, roughly the same amount collected from gas exports.

If the current situation persists, Bolivia might end up importing much more than it exports.

“We are suffering a financial hemorrhage with the import of liquid fuels. It is important to work to provide a solution,” Balanza told reporters.

(Source: Los Tiempos)