(Kallanish Energy, 3.Jan.2019) — Bolivian left-wing autocrat President Evo Morales congratulated and welcomed Brazil’s far-right populist President, Jair Bolsonaro, while attending the latter’s swearing-in ceremony in Brazil Tuesday.
Despite their extremely different political views, the two presidents promised to continue working together for the good of the two nations. There’s “geostrategic importance” between both countries, with Brazil sharing its largest border – some 3,423 kilometers (2,127 miles) – with Bolivia.
“We thank President Jair Bolsonaro for the invitation and wish him a successful administration for the good of the brotherly people of Brazil,” tweeted socialist leader Morales. “Bolivia and Brazil are neighbors for life. While we respect differences, we have a duty to work together for the benefit of our countries.”
However, brotherhood isn’t what’s at stake in any relationship compromise. The renegotiation of a long-term gas supply contract is, Kallanish Energy learns.
A 20-year contract under which Bolivia sells gas to Brazil is due to expire at the end of this year, and the leaders are expected to sit down to negotiate, with both seeking more favorable terms. Through the GASBOL pipeline, the longest gas pipeline in South America, Bolivia exports 50% of its gas to Brazil. Losing such a sales contract would have significant impact on Bolivia’s economy.
“Bolivia depends on Brazil more than ever before,” said Francisco Monaldi, a fellow in Latin American energy policy at the Baker Institute. Thanks to the Vaca Muerta Shale play, Argentina is going to be ‘awash’ with natural gas, reducing demand for Bolivian gas, he said Wednesday.
“The (gas supply) contract with Brazil has to be renegotiated. Bolivia needs massive investment to avoid a large decline in gas production and that will only occur if there is a market for it,” Monaldi added.
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