Brazilian state-owned oil company Petroleo Brasileiro SA (Petrobras) has forecast that Brazil's demand for natural gas will be 35% lower by 2007.
Brazil's demand had been forecast by Petrobras's strategic planning department as 48.8 million cu m/day of natural gas by 2007. And demand was seen at 75 million cu m/day of gas when Brazil kicked off its thermal-power generation program.
However, Petrobras has incurred losses from investments in thermal generation, which never quite paid off because natural gas to fuel thermal plants is too costly, and the Brazil-Bolivia gas pipeline is underdeveloped, Petrobras experts pointed out.
Petrobras said it invested about $500 million to explore, produce, and pump Bolivian gas through the pipeline to Brazil, but only 70% of the pipeline's capacity currently is utilized.
In addition, Brazil signed a "take-or-pay" contract with the Bolivians that oblige Petrobras to pay for a minimum natural gas import quota even when it does not use the fuel.
Recently, Brazil's mines and energy ministry reported that Brazil's bilateral talks aimed at making the take-or-pay clause of the contract "more flexible" failed.
"The problem about natural gas in Brazil is its price," said José Marques, president of the Brazilian Association of Infrastructure and Basic Industry. "Gas is quoted in dollars. While prices remain high, there is no way to expand natural gas consumption in the country," he said.