BRAZIL-BOLIVIA: Morales Breaches Lula/Petrobras Fortress

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Feb 15 2007 (IPS) - Flaunting protocol in his determination to improve the price of the natural gas that his country exports to Brazil, Bolivian President Evo Morales achieved his goal. He persevered, extending his state visit to Brazil until Thursday, and as an extra bonus obtained assistance for development projects as well.

The agreements signed by the two South American countries will represent additional revenues of around 144 million dollars a year for Bolivia, said Bolivian Energy Minister Carlos Villegas. That would amount to 11 percent more than the 1.26 billion dollars that Brazil paid for natural gas imports from Bolivia last year.

Approximately 100 million dollars of that will be brought in by means of a complex formula by which Brazil will pay separately for the ethane and butane (cooking gas) that form part of the natural gas that Bolivia exports to Brazil.

Under the contract in effect between the two countries from 1999 to 2019, Brazil’s state-owned oil company Petrobrás purchases up to 30 million cubic metres a day of natural gas. Last year, the average was 26 million cubic metres a day.

The additional payments will vary, because they depend on the proportion of ethane and butane in the natural gas imported by Brazil, and on future international prices in an unstable market, explained Brazilian Energy Minister Silas Rondeau and the president of Petrobrás, José Sergio Gabrielli.

The new formula forms part of a protocol to the existing contract.

The key aspect of the new arrangement is that “the contract will remain intact,” said Rondeau and Gabrielli. One of their concerns was to ward off criticism that the administration of centre-left President Luiz Inácio Lula da Silva has made too many concessions to neighbouring countries, especially to countries governed by the left, like Bolivia and Venezuela, at the expense of national interests.

The other 44 million additional dollars a year that Bolivia will be taking in, according to Villegas, will come from the increase in the price of natural gas that Bolivia exports to Brazil, from 1.19 to 4.20 dollars per million BTU for up to 2.2 million cubic metres a day of gas that go to a thermoelectric plant in Cuiabá, capital of the west-central Brazilian state of Mato Grosso.

That is a separate contract, because the plant is owned by foreign private capital, but the Brazilian government decided to push the accord through. The additional cost will be paid by the state-owned utility Furnas, which purchases the electricity generated by the plant.

The price of 1.19 dollars “was unfair,” admitted Brazilian Foreign Minister Celso Amorim. The price rise will go into effect on Apr. 15.

But without a doubt the most difficult negotiations involved the contract between Petrobrás and Bolivia’s state-owned energy company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB).

The Morales administration was hoping for the price to go up from the current 4.30 dollars per million BTU to 5.00 dollars. But Petrobrás made it clear that it would not accept modifications to the contract, which only foresees price adjustments every three months, based on the price of a basket of petroleum by-products.

Under the formula that was finally hashed out, Petrobrás will pay the going market price for the ethane and butane contained in the natural gas it imports from Bolivia. The price swings of these products – and the fact that the arrangement “does not break the contract,” as Rondeau stated – apparently led Brazil to agree to the new payment system.

The negotiations stretched into the night on Wednesday, and Morales’s visit was thus extended from eight to 18 hours, ending in the early afternoon on Thursday.

Brazil’s foreign minister remarked that it is unusual for a state visit to turn into a negotiating meeting. Negotiations generally take place prior to a visit, and the presidents meet to sign the previously established accords.

As a result, Morales did not make it to his scheduled visit to Congress, leaving the presidents of the Senate and the Chamber of Deputies waiting and triggering protests from several lawmakers at what they called a “lack of respect” for the legislature of a neighbouring country.

Also contributing to the chaos was heavy rainfall which led to a six-hour delay in the arrival of part of the Bolivian delegation, including five ministers.

After the agreements were reached, Lula said they were beneficial to both countries, and were the result of “a lot of dialogue, much patience and above all great intelligence,” and that they consolidated “a strategic alliance.”

Brazil, he said, “is not imperialistic as many say, nor hegemonic as some would like.” As the most industrialised country in South America, “it does not have to dispute its place with any sister country,” but should offer them “solidarity and generous assistance for their development,” he added.

With respect to Bolivia, Lula acknowledged “the justice of its demands,” and announced his government’s interest in promoting the installation of a petrochemical complex on the border between the two countries and a biodiesel plant in Bolivian territory with Brazilian technological support, and in sharing his country’s experience in the field of agricultural research.

He thus indicated the start of a new phase in bilateral relations, characterised by heavy Brazilian investment in Bolivia. He also reported that his government would donate one million vaccines against foot-and-mouth disease and would send another lot in March, to combat outbreaks of the disease that have appeared in Bolivia in recent weeks.

Morales said he persisted in the negotiations because he was searching for “solutions for the poverty suffered by Bolivians.” He gave his assurances that his government would “live up to all of the contracts” and said he was returning to his country “happy and content” as a result of what his visit achieved.