Thursday, June, 20, 2019 11:50:33

Shell’s Brazil unit and Bolivia’s YPFB ink natural gas supply contract

The Gasbol contracting would be carried out by means of a public call and its draft of the edict is anticipated to be placed for public consultation at the end of January.

Reports have confirmed that the Brazilian unit of Royal Dutch Shell PLC and Yacimientos Petroliferos Fiscales Bolivianos (YPFB) from Bolivia have recently signed a memorandum of understanding for the import of natural gas. The agreement apparently relates to a commercial contract for supplying 4 million cubic meters of natural gas a day up to 2022, and then nearly 10 million cubic meters a day after that.

Citing sources with knowledge of the matter, the non-binding MoU signed between Shell Brasil and YPFB could probably pave the way for a deal in the future. The transaction could improve the position of Shell as a natural gas supplier in the largest economy of Latin America.

The announcement has come as an existing natural gas transportation services contract on Gasbol, the Brazil-Bolivia pipeline, is nearing an end, which would free up capacity, the sources added. Reportedly, the majority ownership of the Gasbol pipeline, being operated by TBG, is held by a subsidiary of the Brazilian oil company Petroleo Brasileiro SA while its minority share is owned by a YPFB subsidiary.

Shell Brasil has said that it would look to take advantage of the opportunity for importing gas from Bolivia as capacity will become available in the Brazil-Bolivia pipeline over the coming years. The company informed that on 31 December, the 20-year long contract between the pipeline operator and Petrobras would come to an end, according to an agreement made in 1999.

Sources further mentioned that contracting of Gasbol would be carried out by means of a public call and its draft of the edict is anticipated to be placed for public consultation at the end of January. Supposedly, TBG would have the responsibility to forward the draft edict which is to be subjected to public consulting and hearing.

After the Brazilian National Agency of Petroleum, Natural Gas and Biofuels approves the bid, TBG would indirectly carry out the contracting of capacity through public call, sources affirmed. With the public call, Petrobras may no more remain the only gas importer to use Gasbol.