Brazil gas prices up on Bolivian import cut

Brazil gas prices up on Bolivian import cut

Sao Paulo, 30 May (Argus) — A 6mn m³/d cut in natural gas supply from Bolivia to Brazil's state-controlled Petrobras that will lead to higher prices in Brazil highlights the need for infrastructure investments.

The 30pc supply cut from state-run YPFB led to Petrobras warning the shortfall would require more LNG imports to fill the gap. The volume is small compared to the total size of Brazil's gas market, but not insignificant. Bolivia shipped 20mn m³/d last year, filling 22pc of Brazil's total demand. The supply cut amounts to 6.4pc of demand, which would require an extra LNG tanker every 13-17 days to fill the gap.

So far this year Brazil's gas demand has lagged that in 2021, when most of its thermal power generation plants were running amid a drought that sapped hydroelectric capacity.

In a few months, the Route 3 outflow pipeline should begin bringing in 10.5mn m³/d of gas from offshore pre-salt production areas, with volumes doubling next year. YPFB said it tried to negotiate with Petrobras to avoid the reduction of shipments, calling the price in the contract signed in 1996 — and amended eight times — "low". "The timing and current price circumstance allow us to maximize prices,"