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Brazil: Gas surpluses mount

WHEN BOLIVIA nationalized its gas industry in 2007, Brazil worried about shortages of natural gas. The government's response was to encourage the construction of liquefied natural gas (LNG) import terminals (PE 5/09 p12). But two years later, instead of a supply crunch, Brazil has a large oversupply. Lower domestic demand has led to a growing problem of surplus supplies, forcing state-controlled Petrobras to auction unwanted gas or resort to flaring. Managers worry the situation could worsen in 2010 when the country's Mexilhão field, in the Santos basin, begins producing and analysts expect Brazil to suffer periodic oversupply problems until 2015. Mexilhão is expected to add 15m cubic metre

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