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SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (April 7, 2009): Brazilian industry pays one of the highest gas prices in the world

April 7, 2009

South America Energy Markets (SAEM) will begin a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. I aim to publish SAEM Daily Roundup from Monday through Friday by noon London time.

Tuesday, April 7, 2009

BRAZIL/GAS PRICES

Brazilian industry pays one of the highest prices for gas when compared with the United States and United Kingdom, writes TN Petroleo citing Folha de Sao Paulo. Only in 2008, the price of imported Bolivian and domestic gas in Sao Paulo rose by 60.7%, according to industry. The cost of gas paid by industry to distributors Comgas of Sao Paulo and Ceg in Rio de Janeiro oscillates between $10.30 and $12.36/MMBtu. Industrial clients blame Petrobras for the high prices. The Brazilian energy company not only imports 99% of the country’s imports, but also has a near-monopoly over the gas sector.

BRAZIL/GAS ACT

The new Gas Act, which was signed into law in early March by President Luiz Inacio Lula da Silva (see South American Energy Markets Daily Roundup, March 31, 2009), is threatening Petrobras’ near-monopoly in the gas sector, according to Rio de Janeiro daily O Globo.  Gas Energy New Ventures is planning to invest $1.25 billion in the construction of a gas-fired plant and LNG terminal. ANP general director, Harold Lima, said that one of the objectives of the new law is to encourage greater investment by the private sector. Analysts are keenly watching what new gas-infrastrcture projects the private sector will invest in and what will be Petrobras’ reaction.

VENEZUELA-JAPAN/ENERGY COOPERATION

President Hugo Chavez, who is on an official visit to Japan, announced the signing of 12 energy cooperation agreements with Tokyo, reports state-owned news agency ABN. Four of the memorandums of understanding (MoU) were between PdVSA and Marubeni, Itochu, Mitsubishi and Mitsui to take part in the Gran Mariscal Sucre LNG project as well as develop the prodigious Orinoco Belt.  Another MoU, which was signed by Pequiven and Marubeni, involves cooperation in oil refining. Pequiven and Mitsui plan to develop cooperation in the petrochemical sector as well. The latest agreement is an example of Venezuela’s need to secure foreign investment to help finance enormous energy projects in the face of plummeted oil prices, which have hit especially hard the Caracas government and PdVSA.

BOLIVIA/GAS DEMAND

Lower demand due to a slowdown in economic growth in Bolivia’s main gas markets of Brazil and Argentina forced exports to average 24 million cu m/day in March, according to Bolivian hydrocarbons association CBH. Of these exports, 19.7 million cu m/day were earmarked for Brazil and 5.23 million cu m/day were supplied to Argentina.  That compares with 30 million cu m/day of gas Brazil imported in December from its western neighbor. Domestic demand during the month under review stood at 5.65 million cu m/day. CBH said that the price of gas in the domestic market in March was on average $1.15/MMBtu. Brazil paid $5.64/MMBtu and  Argentina $7.84/MMBtu.

COLOMBIA/OIL SELF-SUFFICIENCY

Energy regulator ANH president, Armando Zamora, was quoted as saying in Cali-based daily El Pais that Colombia seeks oil self-sufficiency to 2020 thanks to successful past and future tenders for blocks in the Caribbean Sea. Zamora also saw good potential for Colombia to prove up gas reserves. “…if investments in [hydrocarbons] exploration continue [at the present pace], they will at some point produce results in gasfield discoveries, especially in the Colombian Caribben Sea coast,” he said. Exploration investments in 2008 stood at $3.5 billion, according to Zamora.

These briefs can be reprinted as long as as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.

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