Brazilian industry reps to travel with Lula to Bolivia in bid to obtain cheaper gas

By Fabio Teixeira

RIO DE JANEIRO (Reuters) – Brazilian industry representatives will travel with President Luiz Inacio Lula da Silva to Bolivia next week, in a bid to obtain natural gas that should become available after expiration of a supply deal to Argentina, the representatives told Reuters.

Argentina has a supply contract with state-run Bolivian oil firm YPFB set to expire in September. Then, a volume of up to around 4 million cubic meters per day could become available, said the representatives.

“We are going to talk to the authorities and find out what is possible”, Lucien Belmonte, executive president of Abividro, an industry association of glass firms, told Reuters.

There are still a number of unknowns, said Belmonte, including price, and if the volume would actually become available come October.

Bolivia has faced a foiled military coup against the government last week, and the country’s diminishing domestic oil and gas output has been at the heart of its economic and political problems.

YPFB President Armin Dorgathen told Reuters in an interview on Sunday that Brazil was one of the countries most keen to secure gas supplies by building strategic partnerships with YPFB.

He described the recent investment in June by Brazilian firm Fluxus as “relatively big” and said YPFB was “looking for other Brazilian partners” as well as Petrobras, to boost production, exploration and “industrialize” the sector.

The Brazilian representatives hope to use the presidential visit to kickstart talks eventually sign a deal directly with YPFB, which they claim would allow them to obtain a lower price than if they bought through Brazil’s state-run oil firm Petrobras, which has a standing contract with YPFB.

The Brazilian industry has a demand for around 40 million cubic meters of gas per day. Brazil’s industry has long faced issues with high gas prices, that representatives claim make their firms less competitive.

Lowering gas prices is a priority for Brazil’s Energy minister Alexandre Silveira.

“We are looking for an opportunity, what could be an opportunity, to regain competitiveness for the industry,” said Belmonte.

(Reporting by Fabio Teixeira in Rio de Janeiro, additional reporting by Lucinda Elliott in La Paz; Editing by David Gregorio)