Argentina may pressure Brazil over natgas-report

Thu Feb 21, 2008 9:02am EST
BUENOS AIRES, Feb 21 (Reuters) - Argentina may apply pressure on local units of Brazil's state oil company Petrobras in a battle to increase its share of Bolivian natural gas supplies and ease wintertime shortages, a newspaper reported on Thursday.
The government will review natural gas supplies to Petrobras's Argentine petrochemical plants if Brazil does not agree to let Argentina have more natural gas from Bolivia, Clarin newspaper reported on Thursday.
"If Brazil cannot cut its natural gas demands by 2 to 3 million cubic meters a day to redirect that amount to Argentina, the government will not have any option but to review local petrochemical businesses where Petrobras is a big natural gas consumer," an unnamed source at the Planning Ministry told Clarin.
Officials at the ministry were not immediately available to comment on the report.
Brazil's Luiz Inacio Lula da Silva arrives in Buenos Aires on Thursday evening for two days of talks with Argentina's Cristina Fernandez on energy and military projects. Bolivia's Evo Morales joins them for breakfast on Saturday to talk about natural gas.
Brazil's presidential spokesman Marcelo Baumbach said on Wednesday that Lula is "sensitive" to Argentina's natural gas needs but he said that Brazil cannot just give up on the fuel it gets from Bolivia.
"Brazil's priority is its internal supplies and for that reason, it is not able to review the supply volume already set out in the contract (with Bolivia)," Baumbach said.
Petrobras (PETR4.SA: Quote, Profile, Research) has a petrochemical complex in Argentina, as well as a fertilizer plant and a polystyrene plant. Its local arm is Petrobras Energia Participaciones (PCH.BA: Quote, Profile, Research).
Five years of booming economic growth have expanded power demand in Argentina, where the electricity supply is highly dependent on natural gas for thermal generators that use 40 million cubic meters per day.
Argentina supplies most of that but there are fears that, if Bolivian supplies continue low, the country will face energy shortages during the southern hemisphere winter in June and July.
Bolivia has said it will not be able to meet fully its export commitments to neighbors Argentina and Brazil until 2009.
Bolivia currently supplies Brazil with about 28 million cubic meters of gas and needs 6 million to 7 million cubic meters a day for its domestic market. Natural gas exports to Argentina are well below the current maximum contract level of 7.7 million cubic meters per day.
On a recent trip to Brazil, Bolivian Vice President Alvaro Garcia Linera essentially said Brazil and Argentina must sort out between themselves how to divide up Bolivia's natural gas exports. (Reporting by Fiona Ortiz and Cesar Illiano in Buenos Aires and Julio Villaverde in Brasilia)