Page 4 - LatAmOil Week 45 2019

LatAmOil COMMENTARY LatAmOil
Poitical turmoil in Bolivia has affected operations at Shell’s Jaguar X6 well (Photo: El Pais)
How is the gas sector faring in Bolivia?
Widespread political turmoil has not had much impact on gas production so far, but this could change if pro-Morales demonstrations destabilise the interim regime
WHAT:
Bolivia’s long-time president, an advocate
of gas development
and state-led economic planning, has been forced out of office.
WHY:
So far, gas production has suffered little to no disruption.
WHAT NEXT:
Brazil and Argentina might experience supply disruptions in the short run but will persist with long-term plans to phase out Bolivian imports.
BOLIVIA is South America’s largest producer of natural gas, and its long-time president, Evo Morales, made a point of developing the gas sec- tor in the hope of strengthening the country’s economy. As a result, Bolivia’s recent political turmoil is certain to affect the gas industry.
This essay will attempt to describe current conditions in the gas sector. It will also speculate briefly about future developments, following Morales’ reluctant departure from power.
Background
Bolivia began taking an interest in gas in the late 1980s and early 1990s, when geologists found a number of sizeable fields. It did not act quickly to develop these newly found resources, though. This was largely because the government, which controlled the country’s gas reserves, was preoc- cupied with political turmoil.
But in 1994, the industry was privatised, giv- ing foreign investors an opportunity to try their luck. The first to succeed was Brazil’s national oil company (NOC) Petrobras, which began devel- oping its Bolivian reserves and built a cross-bor- der pipeline to supply the Brazilian market in the late 1990s. Meanwhile, several privately owned firms also ventured into Bolivia.
Despite these successes, gas development remained a contentious issue, with indigenous groups and other factions complaining about the way the government was distributing gas revenues. Discontent widened even further in 2003, after the government of then-president Gonzalo Sanchez de Lozada decided to author- ise gas exports. Widespread protests erupted, forcing Lozada’s departure from power (and from the country).
The Morales era
Bolivia was still recovering from this so-called “gas war” in 2005, when Morales made his first run for the presidency. He succeeded and assumed office in January 2006. Just a few months later, he nationalised the energy indus- try, putting oil and gas under the control of the NOC, known as YPFB.
Nationalisation did not put a halt to devel- opment, as YPFB did continue to work with outside investors such as Total (France), Repsol (Spain) and ExxonMobil (US). Rather, the NOC
and its partners were able to bring production
up enough to support domestic gasification pro- grammes and the launch of exports to Argen-
tina, as well as Brazil. 
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w w w . N E W S B A S E . c o m Week 45 14•November•2019