Petrobras hammers out back payment for gas imports

Brazil's federal energy company Petrobras (NYSE: PBR) should sign a deal this week for making back payments for gas imports from Bolivia's federal gas company YPFB, a Petrobras official told journalists at the Power-Gen Latin America congress in Sao Paulo. The deal concerns the difference of what Brazil imported from Bolivia, compared to the amount stipulated in take-or-pay contract, said the official, Rafael Mauro Comino, manager of the company's power division. The Bolivians say the value is US$110mn but Petrobras calculates the value at US$88mn. Petrobras officials would not divulge the exact value agreed between the two sides. "It is in the interest of Petrobras and the Bolivians to increase gas imports. Volumes in the Brazil-Bolivian gas pipeline have recently risen 5 million cubic meters a day [mcm/d] to 19mcm/d, almost reaching 20mcm/d, as a sign of our interest in Bolivian gas," he said. Brazilian officials have been pushing for changes in prices and volumes because local demand for natural gas has been lower than expected. "We need to develop the local gas market more," said Comino. Petrobras must pay for a minimum 24mcm/d according to the take-or-pay contract. The Brazilian company also wants to negotiate cheaper prices for the product. Xisto Viera Filho, VP of regulatory issues and planning at US energy company El Paso, said cheaper natural gas prices are need to make thermoelectric plants more feasible. Comino said Petrobras wants a price that is in line with the market and that will compensate for investments in equipment. "The price of gas always follows oil price to a degree," he said. Petrobras officials say that a new price will only be achieved in 2004 after flexibility the take-or-pay contract is achieved.