Bolivian gas supply will be key for Brazil in 2023

Bolivian natural gas will continue to make a difference in the Brazilian market in 2023 and even gain momentum under the new federal administration, as regional gas production remains constrained by a lack of infrastructure.

Bolivia exported 18mn m³/d to Brazilin 2022 — when Brazil's thermal power generation was low — according to data from Bolivian pipeline company Gas Transboliviano (GTB). That is close to 70pc of Brazil's total gas imports and around 26pc of total Brazilian demand.

Bolivia supplied 20mn m³/d of gas to Brazil in 2021 and was close to repeating that figure in 2022, even though Bolivian state-company YPFB shaved volumes sent to Brazil last year to meet Argentinian demand for gas during the winter. The country averaged 15mn m³/d of gas exports to Brazil from April-September, and reached a low of 12.7mn m³/d in September.

YPFB sees Brazil as a strategic partner and is willing to diversify its clientele, something it will pursue in 2023. The Bolivian company wants to shift volumes imported to Brazil by state-controlled Petrobras to new gas shippers, such as trading companies Tradener and Gas Bridge, which could pay higher prices, closer to international levels.

Gas supply agreements between Brazilian distributors and those traders to import Bolivian gas allowed YPFB to increase prices above its agreement with Petrobras. The companies do not disclose details about the deals, but sources say that the Petrobras-YPFB contract is priced at around 8-9pc of the Brent crude index. Petrobras' signed or amended contracts in 2022 with local gas distributors that were priced at 16.75pc of the Brent index.

Tradener's contract with Santa Catarina's state distributor SCGas is priced at 12.81pc of the Brent index, with a 30pc discount or a 20pc premium. Gas Bridge's contract with SCGas establishes a 13.5pc of the Brent price, plus Bolivian pipeline costs.

Bolivia wants to sign more deals of this kind with final gas consumers in Brazil, especially after 2024. The company said in early January that it aims to "diversify clients in Brazil," focusing commercial efforts to meet its commitment with Petrobras for the next two years and to seek other long-term clients in the liberalized market, where YPFB can supply gas directly to the final consumers on either firm or interruptible contracts — with spot prices — to complement the variable demand from Petrobras and Argentinian company Enarsa.

Lula to foster hermanos

President Luiz Inacio Lula da Silva's views on economic development may favor YPFB plans to access Brazilian customers directly.

Lula met with Argentinian and Bolivian presidents Alberto Fernandez and Luis Arce on 1 January, his first day in office, and discussed energy interactions between the countries, among other topics. Brazil's public bank BNDES is already financing the construction of a 583km (362-mile) stretch of Argentina's Nestor Kirschner pipeline, the kind of deal that matches Lula's past policies of help develop Latin American neighbors that is expected to continue in his new term.

Lula's team also asked Petrobras to freeze any privatization projects underway, which will be reevaluated at a later date. Petrobras still controls pipeline company TBG, which was on track to be sold as part of Petrobras' commitment to antitrust agency Cade, bringing gas from Bolivia into the Brazilian southeast. Gas consumers fear that Petrobras will not resume the sale, allowing Petrobras to control all gas trade with Bolivia and possibly with Argentina, a source told Argus.

By Flávia Pierry