Bolivia will substantially increase prices of natural gas it exports to Brazil, Bolivian President Evo Morales told Sérgio Gabrielli, president of Petroleo Brasileiro SA (Petrobras), in a new wrinkle in the countries’ already tense commercial relations.
During an annual meeting of the Inter-American Development Bank (IDB) in Minas Gerais state, Brazil, Gabrielli acknowledged the importance of the price increase to Brazil and said he is willing to negotiate.
Petrobras imports about 26 million cu m/day of Bolivian gas. Brazilian gas consumption averages 42 million cu m/day. The state company has invested $1.5 billion in Bolivian oil and gas projects over the last decade but has frozen plans to invest $5 billion.
Bolivia has increased taxes on production by foreign oil companies and has asked Petrobras to convert its operations in Bolivia into service companies, a Petrobras spokesman said.
“We don’t want to be a service provider,” Gabrielli said. He insisted the company has no interest in operating in Bolivia without company control of production and exploration. Bolivian officials have said they want complete state control over the production chain.
Last February Petrobras presented Bolivia with proposals for cooperation in oil, gas, refining, petrochemicals, and fuel distribution, along with a $5 billion investment plan. At that time Gabrielli said the company had tried unsuccessfully to restart the talks with the Bolivian government.
Tripled prices
Andres Soliz, Bolivia’s hydrocarbons minister, had said it was logical that Petrobras would postpone investment while contracts are being negotiated.
“Brazil wants to increase the volumes of gas imported from us, and we say that we want better prices,” said Soliz. He added that he hoped to nearly triple the price of Bolivian gas sold to Brazil.
After the inauguration of leftist Bolivian President Evo Morales last January, Petrobras appeared to hold a better bargaining position than other foreign companies producing Bolivian gas because Morales made it clear he favors doing business with state-owned companies as he proceeds along a vaguely defined path toward nationalization.
But Soliz said Brazil has taken a tough negotiating stance on gas purchases, is exerting geopolitical pressure on Bolivia, and views Bolivia “as some kind of semicolony, which will be reflected in the negotiations.”
Gabrielli declared the reports of Soliz’s comments “are leaving us worried” as the company tries to reach a deal over its Bolivian production.
He added that the company doesn’t know what effect Morales’s pledge to nationalize the country’s gas resources will have and that Bolivian officials are not forthcoming with details.
“No one knows, and they don’t have a definition for it,” he said.✦
