Brazil and Bolivia sign deal guaranteeing equal pipeline regulations

Sep 22, 2001 02:00 AM

Brazil's National Petroleum Agency (ANP) and its Bolivian counterpart signed an agreement guaranteeing equal regulations for firms wanting to use natural gas pipelines linking gas-rich Bolivia and Latin America's largest country. "It's an extremely important agreement, which means equal treatment of all companies, better competition and market liberalization," said David Zylbersztajn, head of the ANP, which is Brazil's oil and oil products market regulator.
Earlier this year, Bolivia agreed to increase gas exports to Brazil, where the government is fighting to install new gas-fired power plants amid an acute energy crisis stemming from the country's dependence on hydroelectric plants. Bolivia currently exports about 30 mm cmpd of gas to Brazil, but is expected to increase that amount to 40 mm cmpd.

Brazil's state oil firm Petrobras, which lost its monopoly status in the oil and gas sector in recent years, now has to compete with foreign energy giants, including in the gas transportation sector. Zylbersztajn noted that both foreign and local companies would further benefit from the new agreement.
He also said that a constitutional amendment proposal approved by the Congressional economic commission that allows an equal tax on oil and gas products for all market players, was a great step toward the opening up of the market. "Now everything indicates that the amendment would be in place for the planned market opening from January 2002," he said.
Analysts say the single tax should prompt foreign and local companies to import fuel at the first stage and build their own refineries in Brazil in the future. The size of the tax and the list of products subject to taxation still has to be defined.

The 1997 Petroleum Law put an end to Petrobras' decades of monopoly in oil exploration and production, but the deadline for starting free imports, production and trade of oil products and the end to government-fixed prices was moved to 2002. In the wake of the devastating air attacks in the UnitedStates, Zylbersztajn ruled out any problems with oil supplies for Brazil and said the Brazilian oil sector could even benefit from the situation, especially in case of a war in the Middle East.
"In that case, oil investment should flow from the Middle East to safer places like Brazil," he said. Brazil is a net importer of crude but is also the third largest oil producer in Latin America with an average output of 1.4 mm bpd. Latin America's largest economy is also a net gasoline exporter though the country imports other energy products, such as diesel.
Zylbersztajn, who is leaving his post in October after presiding over the opening of the market for the past four years, said Brazil was well on its way to meeting its oil needs in the next few years as well as boosting exports. "Everything indicates that it will happen in three or four years. There are many oil finds being evaluated, a very decent number, which should lead to higher production."

Zylbersztajn said he did not know who would replace him, but added he hoped it would not be a "political appointment." "I expect the Brazilian oil sector to maintain credibility with foreign investors... Exploration and production rounds should continue on an annual basis," he said.
So far, Brazil has carried out three licensing rounds in which it sold 67 mainly offshore oil blocks to Petrobras and foreign newcomers, raising hundreds of millions of dollars for government coffers. Petrobras is still Brazil's only oil producer while other firms are only in the exploration phase.

Source: Gulf News Online
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