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Bolivia Oil and Gas Report Q4 2011
Business Monitor International, Oct 2011, Pages: 65
The new Bolivia Oil & Gas Report from BMI looks at what a massive downgrade in the country’s gas reserves in early 2011means for the future of the country’s energy sector.
BMI forecasts that oil production will rise slightly from 52,370 barrels per day (b/d) in 2010 to 58,000b/d in 2015, hitting a peak of 60,000b/d in 2013. A relatively subdued consumption trend will mean that Bolivia remains a small oil importer.
The gas supply picture looks more positive over the short term, with production forecast to rise from 14.72bn cubic metres (bcm) in 2010 to 17bcm in 2015. Gas consumption is forecast to rise from 3bcm to 3.65bcm, ensuring that Bolivia will remain an important regional gas supplier, with volumes being sent south via pipeline to Brazil and Argentina.
The long-term trend is less positive for both oil and gas. BMI forecasts oil production steadily declining in the second half of the decade from 58,000b/d to 52,000b/d as mature oil fields enter into decline. Consumption is expected to continue rising at an average rate of about 2% a year, hitting just over 75,000b/d in 2020, meaning there will be a requirement for imports of roughly 23,000b/d. Gas production is expected to rise between 2015 and 2020, but only modestly from 17bcm to 18.5bcm. Consumption will remain around the 4bcm level, leaving around 14bcm free for export to Brazil and Argentina. Gas reserves, however, are expected to start declining noticeably in the second half of the decade, hitting 200bcm in 2020. If that trend carries through into the 2020’s Bolivia’s trading partners may start to question the country’s reliability as a long-term supplier.
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. Global GDP growth in 2011 is forecast at 3.2%, down from 4.3% in 2010. Growth in the eurozone should be marginally higher than 2010, while US and Chinese economic expansion will slow and Japan’s growth will be negative, reflecting the devastating earthquake and tsunami in March 2011. Our oil price assumption for 2011 is US$101.90/bbl for the OPEC basket, falling to US$97.50/bbl in 2012.
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 state-dominated refining and fuels marketing sectors. There is little chance of Bolivia moving up the table over the short term.
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