Brazil Confronting New Crisis Involving Bolivia, Natural Gas

RIO DE JANEIRO -- Brazil faced possible shortages of natural gas that could affect the country's booming economy on Thursday as protests in Bolivia threatened imports from its Latin American neighbor.

An explosion Wednesday to a key natural gas pipeline transporting natural gas from Bolivia to Brazil had reduced shipments by about 10%, Bolivian Finance Minister Luis Alberto Arce told reporters in Brasilia. Natural gas exports to Brazil were reduced by 3 million cubic meters a day, Arce said.

Bolivia exports between 30 million and 31 million cubic meters of gas to Brazil each day.

"The government is taking necessary measures to guarantee supply," Arce said. "We've ordered the armed forces to guard gas fields and facilities in the country, and ordered that police carry out necessary investigations to punish those responsible."

A Sao Paulo state government official, however, told the local Estado news agency that natural gas supplies had been reduced by more than half, with the state putting in place contingency plans that could include rationing.

"The situation is dire," said Sao Paulo state Sanitation and Energy Secretary Dilma Pena. "Exports of gas to Brazil have been reduced more than 50%, to 14 million cubic meters a day."

According to Pena, state officials would work with companies in the country's industrial heartland to minimize the crisis' impact.

"The priority is to maintain the integrity of the system and, because of this, there exist some technical criteria that will be adopted," Pena said.

Industrial companies would see natural gas supplies reduced gradually so that they can shut down in a way that wouldn't damage key machinery and equipment. The contingency plan won't affect residential consumers, commercial businesses and hospitals.