Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 14 -- Bolivia's state-owned Yacimientos Petroliferos Fiscales Bolivianos (YPFB) and 13 oil companies have reached agreements to increase the country's production of natural gas to 44.68 million cu m/day until yearend.

The agreements, which will boost domestic supplies as well as exports, coincide with an announcement of new discoveries of natural gas by Bolivian company GTLI and reports that Bolivia will increase its export of gas to Brazil.

"The three [types of] agreements are aimed at ensuring an increase in production so we can continue to carry out what we have been doing in the domestic market and in that for exports," said YPFB Chief Executive Carlos Villegas, referring to delivery, payment processing, and the revision of development plans.

Villegas said Petrobras Bolivia, Repsol YPF, YPFB-Andina, YPFB-Chaco, BG Bolivia, Total E&P, Petrobras Energia, and Mapetrol are among the firms making the agreements. Villegas told daily newspaper La Razon that natural gas and gas liquids production will increase by 3.68 million cu m this year as a result.

Villegas' statement came as the manager of local firm GTLI announced the successful first production test of a well in the El Palmar field, 40 km from Santa Cruz. The GTLI well was drilled to a depth of 3,500 m and could produce 7 MMcfd of gas.

Both reports will be welcomed in Brazil, where state-run Petroleo Brasilerio SA (Petrobras) has been increasing imports of gas from Bolivia as demand picks up.

"We're restarting imports," said Petrobras Chief Financial Officver Almir Barbassa, who told analysts, "Imports of natural gas from Bolivia are growing."

Barbassa, who noted that Petrobras earlier this reduced imports of Bolivian natural gas to about 19 million cu m/day, said the reduction at that time as the global financial crisis and ensuing economic slowdown reduced demand for the fuel.

In addition, Barbassa said that high reservoir levels in Brazil's hydroelectric power system at the time had reduced the need for electricity from the country's gas-fired electric power plants.

According to Petrobras, Brazil is raising its gas imports now to meet increased demand from gas-fired electric power plants, which has resulted from a drought in southern Brazil that has cut output from hydroelectric sources.