Bolivia loses steam as a gas exporter in South America | International

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An employee works at a natural gas plant near Santa Cruz (Bolivia).Noah Friedman-Rudovsky (Bloomberg)

Bolivia is about to lose the market that pays the best prices for its gas. The inauguration in Argentina of the first phase of the President Néstor Kirchner Gas Pipeline, on July 9, anguish neighboring Bolivia, which sees the closure of the gas market in its southern neighbor close. The decrease in the 600 million dollars that enters from Argentina for the export of hydrocarbons will be a blow while Bolivia is experiencing its first economic crisis in two decades.

The new Argentine gas pipeline is projected to extract up to 21 million cubic meters of gas per day from the Vaca Muerta fields, in southern Argentina, to the central zone of the country. Argentina has also started the reversal works of its Northern Gas Pipeline, which today distributes Bolivian gas in the north of the country, so that it operates in the opposite direction. The end of the cycle in trade between Bolivia and Argentina will be consummated until 2024, when the countries reverse the positions they have maintained for 20 years: then, Bolivia was experiencing a gas boom while the energy crisis erupted in Argentina.

Thanks to Vaca Muerta and the GPNK, Argentina plans to save some 2,000 million dollars in 2023 and, from 2024, more than 4,000 million. “Gas from Vaca Muerta is six times cheaper than the one that is imported,” said the Argentine Secretary of Energy, Flavia Royón, on May 15, when the Government celebrated the end of the welding of the first section of the gas pipeline. Argentina could become a great exporter of natural gas in the region, something that Bolivia is ceasing to be.

“Argentina does not give us a blow; We gave ourselves the blow,” says specialist Álvaro Ríos. An energy consultant, Ríos alludes to the deterioration of the Bolivian gas industry due to lack of investment and, consequently, new discoveries. "In 2014, we exported 48 million cubic meters of gas per day: today, we can only export 22 million," he graphed. “We should be selling 23 million cubic meters to Argentina, but we are only giving it four to eight million cubic meters a day; That is why the contract will no longer last until 2027, as planned, but will end next year," explains Ríos.

The Government of Luis Arce is trying to expand the exploration of new deposits, for which it will invest 326 million dollars this year. Thus, it hopes to overcome the poor performance of recent times in this area. An official report indicates that, between 2005 and 2020, 192 wells were drilled and the production that already existed previously was increased by barely 2%. Two months ago, Arce inaugurated the Yope-X1 well, but commercial potential has yet to be confirmed. Álvaro Ríos is skeptical about the possibility of new discoveries changing the situation. “An exploratory cycle lasts 10 years, so I don't think there will be any changes; what is going to happen with Argentina is not reversible”, he says. Ríos calculates that by 2029 Bolivia will stop exporting gas even to Brazil, the only market it will have left when Argentina closes next year.

The cause will be the lack of reserves. Bolivia could even become an importer of Argentine gas. "It's good that we have a neighboring country with gas, that will be useful to us in the future," says Ríos. The expert thinks that Bolivia's future role in the regional energy game will be to rent its pipelines, which are connected to São Paulo, so that gas from Vaca Muerta is pumped through them to the Brazilian metropolis. Other Bolivian analysts are somewhat more optimistic, but in general it is thought that Bolivia should bet on businesses other than gas.

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Óscar Montes, governor of the Bolivian region of Tarija, on the border with Argentina and the main center of gas production, has just made a call to "think of alternatives" to replace the declining regional industry, which has been suffering from the production crisis since 2015.

The Government has recognized that a big mistake was made during previous governments by not investing more in exploration and by not executing the incentive program for foreign oil companies that had been designed to anticipate this outcome. The ruling party strongly criticized a former hydrocarbons minister who once publicly told then-President Evo Morales that there was nothing to worry about, because Bolivians were floating on "a sea of ​​gas."

The prospect worries southern Bolivia, where the most gas is produced. Óscar Montes, governor of the Tarija region, bordering Argentina and the main center of gas production, has just made a call to "think of alternatives" to replace the declining regional industry, which has been suffering from the production crisis since 2015. For Rodrigo Ayala, an analyst from the producing area, once again the "curse of natural resources" has been consummated, pushing the country through repetitive cycles of "bread and hunger."

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