Gas supply deal with Bolivia almost closed, Argentine officials say

Tuesday, April 5th 2022 - 20:14 UTC

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“Bolivia knows that Argentina is an ally and a friend,” Basteiro explained

Pending Brazil's approval, Argentina has announced it had agreed to purchase additional gas from Bolivia to meet wintertime demand, Integración Energética Argentina Sociedad Anónima (IEASA) announced Tuesday, according to press reports in Buenos Aires.

As per the new understanding, Bolivia is to increase its supply from 10 to 16 MMm3/day.

Argentine President Alberto Fernández is said to be waiting for Brazil's green light to make the announcement together with his Bolivian counterpart Luis Arce Catacora. The issue is critical for provinces in northern Argentina, which would otherwise need to import liquified natural gas (LNG) from elsewhere for the heating of households in the months ahead.

IEASA has reached an agreement with Bolivia's YPFB, which is to be formalized through an “addendum” to the contract both countries have had for over 15 years.

“We had a supply of 7.5 million cubic meters per day from Bolivia, and this week it will reach between 10 and 11 million. By the middle of the year, it will be around 16 million meters,” IEASA head Agustín Gerez explained.

The difference between what was going to be bought from Bolivia (10 MMm3/day) and what was finally agreed upon (16 MMm3/day) represents savings of between US$ 4.5 million and US$ 6 million per day.

“President Alberto Fernández and Vice President Cristina Fernández de Kirchner were aware of the entire negotiation,” said Gerez.

IEASA insists the agreement with Bolivia is a done deal. However, the volumes of gas Bolivia sells to Argentina may not be available for Brazil, which also has a supply deal. Argentine Economy Minister Martín Guzmán is to fly to Brazil in the next few days to smooth over any possible hindrance together with Ambassador Daniel Scioli, who has already played a key role in softening up tensions between President Fernández and Brazil's Jair Bolsonaro. After all, Brazil has priority to consume gas from Bolivia. But since the hydroelectricity situation (the water supply to the energy system) has improved, this gas would be available for Argentina, according to Clarín.

Meanwhile, Argentina's Ambassador to Bolivia Ariel Basteiro Tuesday hoped that the deal was to be finalized shortly. He also mentioned the announcement was to be made Thursday during Arce's trip to Buenos Aires.

“Next Thursday President Luis Arce will be traveling to Argentina and there will be a meeting during most of the morning and noon to define the negotiation. We are close, but the agreement is not definitive yet,” Basteiro said Tuesday morning in a radio interview.

According to the diplomat, the negotiation was delayed, but it started to move forward after the intervention of President Fernández and his Bolivian counterpart. “Bolivia knows that Argentina is an ally and a friend, and the relationship between both presidents was decisive to reach an agreement,” he said.

“I want to emphasize the Bolivian attitude of prioritizing integration with Argentina and of helping us to cover the amount of gas that Argentina needs, at the expense of its domestic market and other contracts with other countries and suppliers,” Basteiro pointed out.

Scioli has been quoted as saying Monday that the gas agreement was “on track” and that “Brazil would cede a part of its imports from Bolivia.” The former Argentine Vice President said his Embassy and Guzmán had ”started negotiations and already had a meeting with the Brazilian Minister of Mines and Energy (Bento Costa Lima) so that Brazil could have some millions of cubic meters more during the winter and then we would compensate it.”