Petrobras signs agreement with Bolivia’s YPFB on natural gas imports

Brazilian energy firm Petrobras has signed a new agreement with Bolivia’s YPFB on natural gas imports.

The deal intends to resolve differences on the performance of the Bolivian natural gas import contract to the Brazilian market.

The agreement clarifies several interpretations of the contract via payments and compensations from one party to the other.

It also includes the execution of a natural gas supply contract to allow the operation of UTE Cuiabá thermoelectric power plant until December 2016.

Petrobras said the deal would have a $268m negative impact on its third-quarter results.

The deal is, however, expected to have a $128m positive impact on Petrobras’ 2014 full year results.

The agreement guarantees the preferential allocation to the Brazilian market if Petrobras discovers any natural gas in Bolivia via its own exploratory efforts.

Brazil had earlier agreed to pay Bolivia more for natural gas imports following the nationalisation of the country’s hydrocarbons production in 2006.

Earlier in 2014, YPFB revealed that Petrobras would spend more than $2bn on exploration activities of the Astillero, San Telmo and Sunchal areas in southern Bolivia.

YPFB expects that the three areas combined hold potential natural gas reserves of approximately 5.99 trillion cubic feet.

The company said that any discoveries will be developed under a joint-venture (JV) with Petrobras.

YPFB will own 55% in the JV and Petrobras will hold the remaining 45%.

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Image: The agreement clarifies several interpretations of the contract. Photo: courtesy of Petrobras.