New gas reserves are good news for Brazil and bad news for Bolivia

Nov 17, 2003 01:00 AM

Brazil has discovered giant gas reserves with an unimaginable impact in the future, since they are just a hundred miles away from the country's main industrial concentration, Sao Paulo which is equivalent to 40 % of the country's GDP.
The enormous "bubble" off-shore Santos port could hold reserves equivalent to 40 tcf. This compares with Argentina's total reserves of 34 tcf and Bolivia's 54 tcf, according to Oscar Prieto head of Comgas, the gas consortium of Shell and British Petroleum in Brazil.

Although six to eight years must elapse before the new discovery reaches Brazilian consumers and the local industry adapts to the new energy system, this is not precisely good news for Bolivia, one of South America's poorest countries that has plans for a massive sale of natural gas from the continent's heartland to Sao Paulo transported by a pipeline already in operation.
However, according to Mr Prieto, Petrobras, Brazil's main oil consortium with a dominant market position has some tough decisions ahead: changing the country's industry's energy supply from hydro and oil to natural gas, or convert natural gas and export liquid by-products.

"Besides the Bolivian pipeline mostly financed by the Brazilians cost over $ 2 bn", said Mr Prieto who nevertheless anticipated Brazil will be interested in a quick development of methanol for the fertilizer industry.
As to residential consumption, "Brazil, Sao Paulo is mainly tropical, with practically no need for heating and therefore gas consumption is mainly for cooking and water heating" explained Mr Prieto adding that Comgas has only 400,000 gas clients among the city's 6 mm electricity consumers.
"In Buenos Aires Metrogas (BP & Shell) has a gas net of 12,000 km but in Sao Paulo Comgas is limited to 3,300 km. Argentine clients consume three times the average Sao Paulo resident".

Source: Enatres
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