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Bolivia Oil and Gas Report Q1 2011
Business Monitor International, Dec 2010, Pages: 76
The Bolivia Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bolivia's oil and gas industry.
The new Bolivia Oil & Gas Report from BMI forecasts that the country will account for 0.73% of Latin American regional oil demand by 2015, while providing 0.48% of supply. Latin American regional use will average an estimated 7.80mn barrels a day (b/d) in 2010. It should rise to 7.96mn b/d in 2011 and reach 8.49mn b/d by 2015. Regional oil production in 2010 should average an estimated 10.02mn b/d. It is set to rise to 11.68mn b/d by 2015. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This total falls to an estimated 2.29mn b/d in 2010 and is forecast to slip further to 2.22mn b/d in 2015. The principal exporters will be Mexico, Venezuela, Colombia and Brazil.
In terms of natural gas, the region in 2010 will consume an estimated 208.5bn cubic metres (bcm), with demand of 263.9bcm targeted for 2015. Production of an estimated 221.0bcm in 2010 should reach 264.3bcm in 2015, and implies 0.4bcm of net imports at the end of the period. Bolivia’s share of gas consumption in 2010 is an estimated 1.30%, while its share of production is put at 5.98%. By 2015, its share of gas consumption is forecast to be 1.25%, with the country accounting for 7.19% of supply.
For 2011, there is considerable oil demand and oil price uncertainty, but still a very strong possibility that oil will trend higher. Economic growth may have been subdued late in 2010 and into early 2011, but should still support meaningful oil demand increases. Non-OPEC supply is likely to emerge only slightly higher so, with continued OPEC discipline, the foundations have been laid for an oil price rise – albeit falling well short of the improvement seen this year. It seems likely that the 2010 average OPEC basket price will have emerged around the US$77.00 per barrel (bbl) level, representing a year-on-year (y-o-y) gain of approximately 27%. Progress towards at least US$80 is seen as achievable in 2011.
Bolivian real GDP growth in 2010 is estimated by BMI to hit 3.4%, with a 3.4% average annual increase forecast for 2010-2015. There is increased state control of oil and gas operations, thanks to government policy that supports re-nationalisation. This means that the burden of development falls heavily on stateowned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and its few remaining international oil company (IOC) partners. We are assuming oil and gas liquids production of no more than 56,000b/d by 2015, and the country is expected to pump 55,000b/d in 2010. Consumption beyond 2009 is forecast to increase by around 2-3% per annum to 2015, implying demand of 62,000b/d by the end of the forecast period.
Between 2010 and 2020, we are forecasting a decrease in Bolivian oil production of 7.2%, with crude volumes peaking in 2012 at 60,000b/d, before falling steadily to 51,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 26.8%, with growth slowing to an assumed 2% per annum towards the end of the period and the country using 69,000b/d by 2020. Gas production is expected to rise steadily, from an estimated 13.2bcm in 2010 to 22bcm by 2020. With demand growth of 48%, this implies that export potential will rise from an estimated 10.5bcm in 2010 to 18bcm by 2020. Details of BMI’s 10-year forecasts can be found in the appendix to this report. A composite Business Environment score of just 37 ranks Bolivia ninth out of 10 countries in BMI’s Latin America universe, reflecting low ratings for both the upstream and downstream business segments.
Bolivia now takes eighth place in BMI’s upstream Business Environment ratings, 11 points ahead of Mexico, and now three points behind Ecuador. Its proven gas resources and gas reserves-to-production ratio (RPR) work in the country’s favour, but are undermined by the state’s renewed control of assets, deteriorating licensing regime and generally unappealing risk environment. The country is at the foot of the league table in BMI’s updated downstream Business Environment ratings, reflecting its statecontrolled refining and marketing segment, modest capacity and less competitive environment, offset by a relatively low level of retail site intensity and the country’s gas self-sufficiency. Venezuela and Chile are immediately ahead of Bolivia in the regional rankings, but the nine-point gap is unlikely to be bridged by Bolivia in the near future.
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