Contents

Introduction

The production of oil and gas has fallen for three consecutive years in Bolivia. Although the decline in international prices for natural gas and oil influenced this, an unfavorable environment for new investment certainly contributed to the fall.

Questions are now growing about Bolivian natural gas exports to Brazil and Argentina in the coming years. The decline in production and the strong rise in domestic gas consumption raise doubts about Bolivia's ability to meet its export commitments. The uncertainty is not only related to supply, but also to demand: both Brazil and Argentina are increasing their production levels and everything indicates that they will require less gas from Bolivia in the coming years.

Given this, the government of Evo Morales is looking for alternative markets for gas, such as the Peruvian and Paraguayan markets. In addition, Bolivia has launched an ambitious process of industrialization of natural gas with the inauguration of the first petrochemical plant in the country. These factors, added to the recovery of the price of gas, could re-energize the Bolivian hydrocarbons sector. However, nothing indicates that there will be changes in the underlying conditions that are holding back investments, especially in exploration.

In this report we will describe the evolution of investments and the production of hydrocarbons in Bolivia since the nationalization of the sector. In addition, we will identify the reasons for doubts about Bolivian natural gas exports to Brazil and Argentina in the coming years. Finally, we will outline the possibilities of a revitalization of the hydrocarbons sector in Bolivia from the rise in international prices and natural gas industrialization projects.

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