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ANP plans open season for Brazil-Bolivia gas line

28 Apr 2017 15:08 (+01:00 GMT)
ANP plans open season for Brazil-Bolivia gas line

Sao Paulo, 28 April (Argus) — Brazil's oil regulator ANP will begin a process of granting third-party access to the Brazilian segment of the Brazil-Bolivia natural gas pipeline in the next two months.

Brazilian law requires a public consultation process to open access to gas pipelines. The ANP told Argus it will issue preliminary terms for the consultation before the end of June and the consultation itself should take place by the end of the year.

Brazilian gas distributors are expected to take capacity on the line as Brazilian state-controlled Petrobras starts to retreat from its dominant position in the gas industry. Petrobras' current 31.5mn m³/d contract for pipeline supply from Bolivian state-owned YPFB expires in 2019.

Bolivia will supply pipeline gas to Petrobras for around three years after its existing contract expires, to supply volumes not delivered over the life of the deal, Bolivian state-owned YPFB operations manager Luis Carlos Sanchez told Argus this week.

Those volumes could be higher than earlier expected as Bolivian gas supply to Brazil, normally around 30mn m3/d, is already dwindling on weak Brazilian demand. In January, the most recent month with available data, shipments sank to 14.54mn m3/d, the lowest level since Brazil's mines and energy ministry began publishing monthly reports in 2007.

Imports from Bolivia in the first month of 2017 were less than half the 31.7mn m3/d recorded in January 2016 and off from 18.2mn m3/d in December 2016.

The downturn stems from a recovery of Brazil's hydroelectric resources and an economic recession that has slowed industrial demand, in addition to rising domestic gas production. Brazil's LNG imports have seen a similar sharp drop in recent months.

But the dip in demand is seen as short-lived. Brazilian gas distributors such as Comgas, SCGas and MSGas are eager to negotiate long-term supply contracts directly with Bolivia to meet what they see as significant repressed demand among residential, vehicular and industrial clients.

Earlier this month, Bolivia's hydrocarbons minister Luis Alberto Sanchez visited Cuiaba, the capital of Mato Grosso state, to discuss the possibility of a new gas supply contract for the state.

The state's gas-fired 480MW Cuiaba power station already consumes Bolivian gas. Last October, Brazil's energy ministry authorized the plant to import up to 2.3mn m3/d of gas from Bolivia on a temporary basis, but the state wants a long-term contract.

Gas distributor MSGas from neighboring Mato Grosso do Sul state is also seeking to negotiate supplies directly with Bolivia.

Allowing long-term access to the gas pipeline would allow these import contracts to be signed.

The planned open season for access is part of a broad effort by the Brazilian government to formulate new gas regulations that would boost competition and investment as Petrobras pulls back.