Lula to mull more natgas supply from Bolivia

RIO DE JANEIRO, Nov 5 (Reuters) - Brazilian President Luiz Inacio Lula da Silva plans to travel to Bolivia before the end of the year to discuss an increase in natural gas supplies to gas-starving Brazil, foreign minister Celso Amorim said Monday.

Any potential increase in gas deliveries would require new investment by Brazil's state energy giant Petrobras (PETR4.SA)(PBR.N) in exploration and production in Bolivia.

Petrobras froze around $2 billion in planned investment there after Bolivia hiked taxes and nationalized the natural gas sector last year. It has confined spending to maintenance of existing production levels, but Amorim said there has been progress made lately toward the resumption of some investment.

"We need the gas and this is pretty obvious. Brazil is Bolivia's main client and I think that with the climate of understanding that has been achieved, we'll come to a deal," Amorim told reporters.

He said that before Lula's visit he and his Bolivian counterpart Evo Morales will have a chance to chat informally at the Ibero-American Summit in Chile this week. He could not comment on a planned visit by Petrobras chief executive, Jose Sergio Gabrielli, to La Paz on Tuesday.

Analysts have long been warning of a natural gas shortage in Brazil, but last week the crisis became evident when Petrobras had to trim deliveries to distributors in order to feed gas-fired thermoelectric power plants.

Thermal plants are used as back-up to the predominantly hydroelectric system in Brazil, but they need guaranteed supplies in case they all have to work at the same time.

"I am not an expert and I didn't know about this vulnerability ... but regardless, Brazil is growing at 5 percent a year, and we will need more energy. It will have to come from various places and the more comes from the region (Latin America), the better," Amorim said.

Petrobras is preparing to start importing liquefied natural gas next year, which it says will guarantee fuel for gas-fired plants just at times when they are working. In Bolivia's case, imports via a pipeline come on a permanent, take-or-pay basis.

The reduction of gas supplies to distributors by Petrobras highlights the supply challenges facing South American consumers, including Argentina and Chile.

After Bolivia naturalized its gas and oil industries in May 2006, the failure of Brazil to develop its own gas reserves and the growing risks of energy rationing have come under the spotlight. Brazil suffered energy rationing in 2001, brought about by droughts and years of poor planning.