March 6, 2020 / 7:29 PM / a month ago

Bolivia extends gas deal with Brazil's Petrobras to 2026

LA PAZ, March 6 (Reuters) - Bolivian state oil company YPFB has signed a deal with Brazil’s Petrobras to extend natural gas exports until 2026, representing potential income for the landlocked South American nation of up to around $6 billion over the period.

The deal, signed in the city of Santa Cruz, is the eighth addendum to an agreement first struck in 1999, which expired at the end of last year with Bolivia locked in political turmoil after long-term president Evo Morales resigned under pressure.

A short-term 90 day extension was agreed after it expired.

Bolivia’s minister of hydrocarbons, Víctor Hugo Zamora, told reporters that the extension would inject between $4 billion and 6 billion into the country’s flagging economy, which has slowed amid stalling gas exports over the last few years.

“It guarantees us income so that we can live in peace, covering the economic needs and demands of the state,” he added.

Bolivia is heading toward elections in May after an October vote was annulled following widespread protests. The new vote will see conservative interim leader Jeanine Anez taking on a candidate from Morales’ socialist party.

The tie-up between YPFB and Petrobras has created revenue of about $32 billion for Bolivia over the last two decades.

The new agreement, however, establishes a new daily sales volume of between 14 million and 20 million cubic meters, which is down from the level in the initial contract, which had been between around 24 million to 30 million cubic meters per day.

“First we will assure the volumes that we can produce today as Bolivians and meet Petrobras’ demand requirements. What we did is look for the maximum volume that can be traded between YPFB and Petrobras,” YPFB President Herland Soliz said.

The price of gas exports will be indexed to oil prices. (Reporting by Danny Ramos in La Paz; Writing by Eliana Raszewski and Adam Jourdan; Editing by Steve Orlofsky)

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