Brazil Announces Natgas Rationing Due to Pipeline Accident

Brazil's federal government has introduced natural gas rationing measures after landslides in Bolivia damaged three pipelines on April 2, reducing gas supplies to the 3,000km Brazil-Bolivia (B2B) natural gas pipeline, Brazil's mines and energy ministry announced.

The rationing is expected to last for at least seven days, the time needed to repair the 800-meter damaged section of pipeline, the statement said.

Brazil's government has already cut natural gas supplies to thermo power plants 72% and gas supply to refineries operated by federal energy company Petrobras (NYSE: PB) 51%. From Tuesday (Apr 11), natural gas distributors will receive 12% less gas, the statement said.

The decision to implement rationing was made after emergency meetings between national hydrocarbons regulator ANP, regional regulators and representatives from the country's 24 gas distributors to discuss the Bolivian gas supply problems.

"The measures that were within federal government control have already been taken but now distributors will have to negotiate the reduction in supply with their clients," a mines and energy spokesperson told BNamericas.

Sulgas, the gas distributor controlled by the southern state of Rio Grande do Sul, plans to reduce the 1.2 million cubic meters of gas a day (Mm3/d) supply in the state 15% from April 14, the state government energy department said in a statement Monday.

Although the supply cuts were planned to start March 11, the confirmation of supplies over the weekend and supply guarantees by Petrobras led Sulgas to postpone the measure, the state government said in the statement.

The plan is expected to only affect two of its 75 large industrial clients including Petrobras' Refap refinery, which will receive 132,000m3/d instead of the normal 240,000m3/d, while petrochemicals company Copesul will receive 48,000m3/d less gas, the statement said.

Sulgas said supplies of vehicular natural gas (VNG) would not be affected.

Petrobras repair crews obtained access to the damaged part of the pipeline last weekend (April 8-9), a week after the accident occurred, as protesters in a land dispute in the Chaco region, 700km south of La Paz, had blocked access to the site, a Petrobras spokesperson told BNamericas.

Heavy rains in Bolivia caused landslides in the Los Monos gorge that damaged three parallel pipelines, one of which is operated by Petrobras.

Local gas transport company Transredes completed repairs on one of the damaged natural gas pipelines on Sunday, enabling gas supplies from San Alberto field to Tarija department to resume, local press reported.

Although the B2B pipeline itself was not damaged, production of gas from the San Antonio and Margarita gas fields that feed the pipeline was reduced because of the lack of gas liquids storage capacity, Petrobras said in a statement.

Petrobras expects to finish repairing the liquids pipeline by the start of next week, the spokesperson said.

The incident reduced Bolivian gas supply to Brazil about 5Mm3/d, according to Brazil's mines and energy ministry. B2B 30Mm3/d capacity and carried an average of some 23Mm3/d in 2005, peaking at round 26Mm3/d.

Brazil's mines and energy ministry said the reduction in gas supply to power plants should not affect power supply in Brazil because of the full reservoirs of hydroelectric plants, which account for over 70% of the country's power supply.

"The reservoirs are full and gas-fired generation can easily be replaced," a spokesperson for Brazil's national grid operator ONS told BNamericas.

According to data from ONS, reservoir levels in the north and northeastern regions are 96% and 95% full respectively, reservoirs in the southeastern region are 87% full and in the south are 48% full.

Brazilian gas demand is around 42Mm3/d, of which about 51% is consumed by industries and 28% by power generation, according to data from national association of gas distribution companies Abegas.

According to ANP data, total natural gas supply in Brazil in January was 53Mm3/d, including 25Mm3/d from Bolivia and 27Mm3/d net domestic production.

Petrobras currently consumes about 7.7Mm3/d for its internal processes, excluding refining. It also re-injects and burns some 12Mm3/d.

Petrobras' Replan, Recap and Repar refineries consumed 1.5Mm3/d of Bolivian natural gas in January, according to ANP information.

Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.