Brazil's Petrobras fines Bolivia for failing to meet LNG deliveries

RIO DE JANEIRO, March 26 (Reuters) - Brazilian state-run oil company Petrobras has fined Bolivia’s state oil company YPFB after it failed to deliver liquefied natural gas (LNG) volumes secured under a contract through the Bolivia-Brazil pipeline during 2018, a Petrobras executive said on Tuesday.

Marcelo Cruz, the executive manager of gas and energy at Petroleo Brasileiro SA, declined to reveal the value of the fine, citing confidentiality, but confirmed that it was a “relevant” amount.

Cruz, who spoke to Reuters by phone, said the fine, paid last week, was aimed at offsetting possible losses for Petrobras, which ends up having to compensate the volumes from other sources.

“At the moment it does not deliver the gas, I end up having to go to the market and buy LNG. On average, LNG is more expensive than Bolivian gas,” Cruz said. “The spirit of the fine is this: to compensate for any losses that may occur.”

Cruz said YPFB had not been able to deliver the volumes Petrobras needed due to a reduction of exploratory investments in recent years, which had led to a drop in production. Bolivia’s domestic needs had also grown, constricting supply, he said.

Last year, Petrobras demanded an average of 26 million cubic meters per day of natural gas, while YPFB delivered 22.6 million, according to official figures.

Due to Bolivia’s difficulties, Cruz said companies are negotiating a possible revision of the volume of gas contracted. (Reporting by Gabriel Stargardter; Editing by Leslie Adler)