Petrobras seeks new Bolivia talks

02/04/2006 | Lucy Conger

Company leaves door open for further investment

The impasse that soured relations last week between Bolivia and Petrobras, the country’s largest foreign investor, could be cleared up if Bolivia takes the right steps to renew negotiations, according to a spokesman for the Brazilian oil and gas company.

“For one month, Petrobras has been trying to get negotiations renewed but Bolivia won’t schedule a time for meeting,” a Petrobras spokesman told Emerging Markets, leaving the door open for further talks on investment in the country.

Following a breakdown in negot- iations with the government, Petrobras announced last Wednesday it was suspending plans to invest $5 billion in the Andean nation’s gas sector. Petrobras CEO Jose Sergio Gabrielli spoke out in strong terms. “We are concerned because there is a group of investments that must be made and the decision process depends on what is going to happen in Bolivia,” Gabrielli told EFE news agency.

Gabrielli’s comments were intended “to put pressure on Bolivia to take up negotiations again,” the spokesman said. Petrobras had been negotiating in Bolivia with the directors of YPFB (Yacimentos Petroliferos Fiscales Bolivianos), Bolivia’s state-owned energy firm, until one month ago.

Gabrielli’s remarks met with a sharp reply from Bolivia’s Hydrocarbons Minister, Andres Soliz-Rada who called for more “cordiality” in the relationship and said the government would not cede to pressures, O Estado de Sao Paulo reported.

“We are the best option in natural gas for Brazil because we will always be able to offer lower prices than any other place,” Soliz-Rada said.

Petrobras has a contract to purchase natural gas from Bolivia until 2019, which stipulates that the price of gas can be reviewed periodically.

Brazil depends on imported gas from Bolivia for 50% of its natural gas consumption, and pays between $3 and $3.50 per million cubic feet. The international price of natural gas is $8 per million cubic feet.

Evo Morales will launch legislation on July 12 to nationalize the natural resources of the country that include the second largest natural gas reserves, after those of Venezuela, in South America.

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