Bolivia hopes to increase joint energy projects with Brazil

Jan 08, 2003 01:00 AM

United by an extensive border as well as a gigantic gas pipeline today, Brazil is currently Bolivia's main partner. Although both countries manage various integration projects together, natural gas has become the central axis of economic relations.
There are two central points in this topic. The first is related to the purchase and sale of this energy source and the second to the value-added projects which can be implemented, such as thermoelectric plants.

Regarding the first point, Brazil's gas demand did not increase as expected, mainly because of the price, which is currently high ($ 1.4 per Btu) according to the Brasilia government. In this sense, both countries agreed to revise prices and ended up lowering the cost of transporting gas: $ 0.35 on the Brazilian side and $ 0.10 on the Bolivian side.
This without affecting the wellhead value, which is the source of resources for Bolivia. Minister without Portfolio in charge of Hydrocarbons Fernando Illanes confirmed that this discount in transport tariffs came in force on 1 January this year. Expectations are that this measure will increase the Brazilian demand and therefore improve the treasury's revenues.

Regarding the second point, based on the recent inauguration of President Luiz Inacio Lula da Silva, Bolivia hopes to define projects for the construction of thermoelectric plants at the border. With this purpose in mind, President Gonzalo Sanchez de Lozada travelled to Brazil to Lula's inauguration in order to begin relations with the new head of state, gas being the first topic on the agenda. Other projects on road integration, such as the Santa Cruz-Puerto Suarez road, are also being debated.
As the largest Latin American economy, Brazil's development influences smaller economies. In this case, a possible solution for Bolivia's crisis depends on Brazil's progress. Five binational commissions are currently working on integration projects.

Source: BBC
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