The 3rd producer of the natural gas Bolivia demonstrates the significant reduction in export

The 3rd producer of the natural gas Bolivia demonstrates the significant reduction in export
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During plenty of years, the Latin American republic Bolivia has been one of the biggest providers of such natural resources as natural gas and hydrocarbons. According to the information collected during the last 10 years, the country has managed to produce more than 20 billion cubic meters of natural gas yearly, which has made it one of the leading South American producers. The greater part of gas in Bolivia was used for export to Brazil and Argentina. Bolivia owns the gas treatment plant, which is 150 miles to the south from Santa Cruz with a gas field 5600 meters beneath the Andean foothills.

The most significant record of production was noticed in 2014 when the international reserves production totaled about $15 billion. These figures provoked the government to develop aggressive investment programs to enlarge the connectivity of the natural gas within the country.

Bolivia, being the major exporter of natural gas, has also become one of the most important suppliers of the crude oil to Brazil and Argentina via the pipeline in Chile. Nevertheless, the investments in the oil industry have not been well analyzed, which might become a real problem for the country, as the existent gas deposits keep running out. Understanding what the main economic activity in Bolivia is, the government should create the conditions for its development.

The current situation with the Bolivian exports: a significant decrease

As it has been mentioned, the reserves of the natural gas are running out. In accordance with the specialists’ opinion, they will finally come to end by 2025. Bolivia has very important contracts with the Latin American countries, which oblige it to provide them with the definite quantity of natural gas. To elongate the contracts, the country has to prove that there are enough reserves of the natural resources for the export. Nevertheless, the investment in the exploration activity of natural gas is low, which makes it almost impossible.

One of the reasons for such bad situation is the investments in various projects, such as:

  • crude oil extraction
  • enlargement of the gas connectivity within the state.

All of the above-mentioned demand lots of funds. Besides, instead of investing in the exploration works, the government prefers closing the existing projects, where natural gas is used, in order to keep the fuel economy safe. The national consumption of gas keeps growing as well.

As for the current figures, the great decline in the gas prices is obvious. The prices of exports in Bolivia decreased twice:

  • by 50.8% from Bolivia to Rio in 2016
  • by 50.9% from Bolivia to Argentina (compared to 2015).

In 2016, YPFB (the only company which has a right for the export in Bolivia after nationalization) did not manage to export the amount of natural gas required by the contract to Argentine. It made the Energia Argentina firm impose $2.1 million fine on them.

The consequences of the Bolivian export decline

If the situation does not change, it can lead to:

  • the stagnation of the country development
  • the lowering of the demand for the long-term contracts
  • the delays in the development of the energy resources
  • the danger for the energy security of the country.

The troubles are greatly dependent on the Evo Morales project of the nationalization created in 2006. It provoked the decrease of the exploring activity in the region. Before the project, any of the big producers had a right to export natural gas to the international market.

Certain companies still continue working in Bolivia:

  • Repsol
  • Shell
  • Pluspetrol
  • Total
  • Petrobras.

However, they are not able to reverse the current situation with their investments.

According to the experts, in order to improve the investment conditions, it is necessary to provide the people doing business in Bolivia with:

  • transparency
  • clear rules and regulations
  • independency from the institutions
  • easiness of the business management
  • stability
  • economic stimulus.

The YPFB company’s point of view

Despite the general concern of the society and businesses about the situation in the country, the government and YPFB stay positive. The representatives assure that Bolivia has enough reserves of the energy resources. As they claim, it is able to resist the industrialization and the current problems.

As the Bolivian energy expert Alfonso Canedo thinks, there are not political, but technical and valid reasons for the concerns.