Gas pipeline shared with Bolivia could become headache for Brazil

The presence of Evo Morales, Bolivia’s left-wing leader, at Jair Bolsonaro’s inauguration ceremony in January raised more than a few eyebrows. Mr. Morales was the only left-wing head of state in the continent to show up and has since been the only member of the South American “Pink Tide” that Brazil’s far-right president hasn’t actively railed against.

Kirchnerism in Argentina and Nicolás Maduro’s Venezuela have both been on the receiving end of Mr. Bolsonaro’s motormouth, yet his Bolivian counterpart has been spared.

There is a pragmatic reason for this, however, embodied by Gasbol—a mammoth 3,150-kilometer pipeline transporting natural gas from Bolivia. Despite current ideological differences, the two countries share a profitable trade relationship, which is based almost exclusively around natural gas.

---

Bolivian exports to Brazil: all about natural gas

---

Around 27 percent of natural gas consumed in Brazil comes from Bolivia. And while Brazil is the leading recipient of Bolivian exports, 96 percent of which is natural gas.

When the Gasbol pipeline was opened in 1999, a 20-year contract between the two countries ended up as a win-win. For Bolivia, gas exports went hand in hand with the country’s fast cycle of development, and when Evo Morales took office in 2006 he started a plan to nationalize hydrocarbons.

Yacimientos Petrolíferos Fiscales Bolivianos (YPBF), Bolivia’s state-owned oil and gas company, began doing business with major multinationals and taxed its production at over 50 percent to fund this new economic stage. At the same time, Latin American countries were enjoying a commodities boom with increasing global demands.

Brazil had always been happy with this relationship. Last year, Brazilian exports to Bolivia jumped 3.2 percent, reaching USD 1.6 billion. The gas coming from the Western South America coast remains the priority in the two countries’ dealings, as underlined...