Bolivia to raise gas prices for Brazil after agreement with Argentina

RIO DE JANEIRO, BRAZIL -Bolivia is seeking to negotiate better payment terms with Brazil for the sale of gas, having recently reached an agreement with Argentina that would bring the country more than US$100 million.

The Minister of Hydrocarbons and Energy, Franklin Molina Ortiz, said that after the bilateral meeting between President Luis Arce and his Argentine counterpart Alberto Fernandez on Thursday, an agreement was reached that guarantees gas exports to the neighboring country for the winter and “the best price in history” for Bolivia to sell additional quantities of this resource.

“This agreement guarantees the highest price in Bolivia’s history for gas. Bolivia has committed to supply additional volumes for the winter if Argentina needs them and we have the availability. We are offering 14 million cubic meters per day (MMmcd)”, Molina explained.

“However, if the neighboring country demands more, we can increase the offer to about 18 MMmcd, depending on how much gas is available to us, and a price of about US$20 per MMmc will be charged for these additional quantities. These negotiations have allowed us to reach an agreement that is beneficial for the country, but also for Argentina,” Molina added.

BOLIVIAN GAS WILL BECOME A SCARCE COMMODITY

Bolivian gas will become a scarce commodity in the coming years, presenting a challenge for Argentina and Brazil. The countries will need to replace lost import volumes and make up for a larger supply gap as domestic production will be insufficient.

The two countries, whose combined gas demand is set to grow to 90 billion cu m (bcm = cubic meters) in 2025 from an estimated 76.5 bcm in 2020, will not only need to replace lost import volumes, but will also need to make up for a larger supply gap as domestic production will be insufficient, a Rystad Energy report finds.

Rystad Energy estimates Argentina’s gas demand in 2020 at 52.5 bcm and Brazil’s at 24 bcm. Their combined demand is set to grow to almost 90 bcm in 2025, as Argentina’s will grow to 60 bcm and Brazil’s to 29.6 bcm that year.

However, domestic supply lags demand. Brazil’s own supply is estimated at just 20.1 bcm for 2020 and Argentina’s at 42.2 bcm, translating to a combined 62.3 bcm of supply from the two countries – 14.2 bcm below demand levels this year. The gap will only widen in 2025, as combined supply will rise to 72 bcm, creating an import need of an additional 18 bcm to match demand.