Petrobras: Brazilian natural gas demand in 2007 to be 35% less than predicted

Brazilian state-owned Petroleo Brasileiro SA (Petrobras) has said that Brazil's domestic demand for natural gas will be 35% lower in 2007 than it initially had predicted.

July 8, 2003

2 min read

By Peter Howard Wertheim
OGJ correspondent

RIO DE JANEIRO, July 8 -- Brazilian state-owned Petroleo Brasileiro SA (Petrobras) has said that Brazil's domestic demand for natural gas will be 35% lower in 2007 than it initially had predicted.

Brazil's demand had been forecast by Petrobras's strategic planning department as 48.8 million cu m of gas per day by 2007. And demand was seen at 75 million cu m 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.