Bolivia Oil and Gas Report Q1 2012

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BMI View: With investment flowing into a series of development projects, the short-term outlook for Bolivian gas output is positive. Rising gas output will allow Bolivia to increase exports to its southern neighbour Argentina in line with the countries’ 2010 gas supply deal, and maintain its position as a major regional supplier. In the wake of the reserves scandal, however, the long-term outlook is much more uncertain. Poor fiscal terms and memories of the 2006 nationalisations have discouraged investment in new exploration, raising the prospects of gas reserves declining rapidly over the coming decade and threatening the country’s reputation as a reliable supplier. Bolivia’s oil and gas sector is focused on developing the country’s massive gas reserves. Those reserves have proved to be the backbone of the economy and made the country a significant regional gas supplier. In spite of a number of challenges, we expect Bolivia’s gas sector to expand over the short term. We forecast gas production rising from 14.72bcm in 2010 to 15.10 in 2011 before growth accelerates, largely on the back of Repsol YPF’s Margarita gas project, and production hits 19.5bcm in 2016.

  • Over the same period, Bolivia’s domestic gas consumption should continue growing at a fairly healthy rate, but overall consumption should stay below 4bcm by 2016. This should allow for exports to grow at a healthy rate in line with Bolivia’s 2010 gas supply deal with Argentina and existing supply agreement with Brazil. We forecast gas exports rising from 11.5bcm in 2010 to about 15bcm in 2015 before surpassing 16bcm in the latter half of the decade. Bolivia’s supply contract with Argentina calls for imports to gradually rise from around 1.5bcm in 2010 to 10.1bcm in 2021, while the existing supply deal with Brazil calls from exports of between 8.7- 11.3bcm.

  • While we believe Bolivia will be able to meet its supply commitments over the coming decade, the long-term outlook is far less certain. The country’s gas sector was plunged into crisis after a reserves scandal saw its reserves base cut in half. The crisis has cast doubt over the country’s reliability as a long-term regional gas supplier. The concerns are compounded by the fact that, although investment is flowing into the sector, very little of it is directed at new exploration. In an attempt to address the issue, state-run Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) said in May 2011 that the first new exploration concessions in the country since 2006 would be awarded in the near future.

  •  Although most investment is focused on developing Bolivia’s gas reserves, the country does produce small quantities on oil. We forecast oil production climbing from about 52,000b/d in 2010 to 60,000b/d in 2013. From 2014, however, oil production will start to decline, falling to about 51,000b/d by 2021. Demand is expected to rise to around 2% per year over the period, nearing 80,000b/d by 2021. As a result, Bolivia’s modest oil import requirement in forecast to continue.

  • There is increased state control of oil and gas operations, thanks to a government policy which supports re-nationalisation. This means the burden of development falls heavily on state-owned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and its few remaining international oil company (IOC) partners. Nevertheless some foreign companies continue to invest. Repsol YPF is leading a consortium of BG Group and Pan American Energy that will invest over US$1bn expanding output from the Margarita gas field.

  • Bolivia comes in at the bottom of BMI’s composite Business Environment (BE) rating table for Latin America, which combines upstream and downstream scores. This reflects the country’s eighth place in our updated upstream Business Environment ratings, ahead of only Chile and Mexico. The poor showing reflects the recent cut to the country’s gas reserves, limited production growth potential and state dominance of the sector. Bolivia is at the bottom of the league table in BMI’s downstream Business Environment ratings, reflecting its small and statedominated refining and fuels marketing sectors. There is little chance of Bolivia moving up the table over the short term.


Table  of Contents

BMI Industry View 5
SWOT Analysis 7
Bolivia Oil and Gas SWOT 7
Global Energy Market Outlook 8
Table: Global Oil Consumption (000b/d), 2009-2016 . 11
Table: Global Oil Production (000b/d), 2009-2016 12
Regional Energy Market Outlook 13
Oil Supply And Demand .. 13
Table: Latin America Oil Consumption (000b/d), 2009-2016 . 15
Table: Latin America Oil Production (000b/d), 2009-2016 ... 16
Table: Latin America Oil Refining Capacity (000b/d), 2009-2016 ... 17
Gas Supply And Demand 18
Table: Latin America Gas Consumption (bcm), 2009-2016 ... 19
Table: Latin America Gas Production (bcm), 2009-2016 . 19
Liquefied Natural Gas 20
Table: Latin America LNG Exports (bcm), 2009-2016 20
Bolivia Energy Market Overview 21
Industry Forecast Scenario ... 23
Oil And Gas Reserves 23
Oil Supply And Demand .. 24
Gas Supply And Demand 24
LNG .. 25
Refining and Oil Products Trade ... 26
Revenues/Import Costs ... 26
Table: Bolivia Oil and Gas Historical Data And Forecasts, 2014-2016 26
Long-Term Energy Outlook . 28
Oil And Gas Infrastructure 29
Oil Refineries ... 29
Oil And Gas Pipelines 29
Regional and Country Risk/Reward Ratings 31
Latin America Region 31
Composite Scores .. 31
Table: Regional Composite Risk/Reward Ratings ... 31
Upstream Scores ... 32
Table: Regional Upstream Risk/Reward Ratings 32
Downstream Scores ... 33
Table: Regional Downstream Risk/Reward Ratings 33
Competitive Landscape ... 34
Executive Summary 34
Table: Key Players – Bolivian Oil And Gas Sector . 35
Overview/State Role ... 36
Licensing and Regulation 36
Government Policy 37
International Energy Relations . 38
Table: Key Upstream Players ... 40
Bolivia Oil & Gas Report Q1 2012
© Business Monitor International Ltd Page 4
Table: Key Downstream Player 40
Company Monitor ... 41
Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) . 41
Petróleo Brasileiro 44
Repsol YPF E&P Bolivia 46
Total – Summary ... 49
BG Group – Summary 49
YPFB Chaco – Summary 50
Petroandina – Summary . 50
Gazprom – Summary . 51
Transredes – Summary ... 52
YPFB Logística – Summary . 52
GTL International – Summary .. 53
Appendix: Oil And Gas Long-Term Forecasts .. 54
Regional Oil Demand 54
Table: Latin America Long-term Oil Consumption (000b/d), 2014-2021 ... 54
Regional Oil Supply ... 55
Table: Latin America Long-term Oil Production (000b/d), 2014-2021 . 55
Regional Gas Demand 56
Table: Latin America Long-Term Gas Consumption (bcm) 2014-2021 . 56
Regional Gas Supply .. 57
Table: Latin America – Long-Term Gas Production (bcm), 2014-2021 57
Methodology And Risks To Forecasts 58
Glossary Of Terms . 59
Table: Glossary Of Terms 59
Oil And Gas Risk/Reward Ratings Methodology ... 61
Ratings Overview .. 61
Table: BMI’s Oil & Gas Business Environment Ratings – Structure 62
Indicators 63
Table: BMI’s Oil & Gas Upstream Ratings – Methodology .. 63
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology ... 64
BMI Methodology ... 66
How We Generate Our Industry Forecasts ... 66
Energy Industry 66
Cross checks 67
Sources .. 67

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