Brazil to turn off oil-fired power plants

RIO DE JANEIRO, May 5 (Reuters) - Brazil will turn off thermoelectric power plants working on fuel oil and diesel, which were brought on stream at the end of last year to prevent power supply problems, the energy ministry said on Monday.

A total of 2,600 megawatts of thermoelectric capacity will be removed from the grid to reduce costs, a ministry spokesman said. Natural gas-fired plants will continue operating.

Brazil relies on hydroelectric dams for most of its electricity needs. Droughts had reduced water levels in reservoirs to critical levels, bringing about fears of power shortages, but abundant rains refilled them early this year.

The ministry said the power generation levels even after the withdrawal of the oil-fired plants from the system were sufficient to start sending energy to Argentina.

Brazil will start supplying Argentina with power next week to help its southern neighbor overcome an energy shortage during the southern hemisphere's winter months, the ministry said. It will send 500 megawatts next week and increase the exports to 800 megawatts the following week.

Brazil's energy minister, Edison Lobao, said last week Latin America's largest country will provide Argentina with 800 to 1,500 megawatts of power between May and August. Argentina will pay for part of the energy and compensate Brazil for the rest by returning power at the end of the year.

Some analysts have questioned Argentina's ability to repay with energy deliveries. (Reporting by Denise Luna, writing by Andrei Khalip; Editing by Braden Reddall)