BOLIVIA - Hydrocarbons Sector > http://infoserv2.ita.doc.gov/ticwebsite/laweb.nsf/3c5a68c244d2af1a85256691006d7add/e39470f610fdf21885256923006f655b!OpenDocument > Bolivia > Hydrocarbons Sector > Posted By: Trade Information Center > Hydrocarbon sector: the inauguration of the Bolivia/Brazil pipeline is but > the most concrete example of the developments in Bolivia's hydrocarbon > sector that have moved --albeit slowly-- towards creating a large-scale > export capability over the last 25 years. The breakup and capitalization > of YPFB, the extensive investment in the sector in anticipation of the > opening of the pipeline and the market's expectation that Brazil's > seemingly limitless demand will recover shortly from its present dip have > all contributed to a boom-town atmosphere in santa cruz, at the center of > Bolivia's hydrocarbons holdings. Much-touted announcements of discoveries > of new fields abound, some that hold promise, others that have proven to > be a "bust"; new production concessions will be awarded march 1. A > significant portion of activity in this sector has been the result of > investment by us-based firms, such as Enron and the former Amoco. > > Bolivia has two important oil and gas zones, both located on ancient > sedimentary basins: the Altiplano Zone and the Sub-Andean Zone that > includes the plains of the Benian Chaco. (Local sources regard the > Altiplano Zone as economically "non-productive".) it is estimated That > 611,000 sq km, of Bolivia's total land area of 1,093,581 sq km, are > potentially rich in oil and gas resources. Of these, today only 136,507 sq > km are being exploited under joint venture contracts administered by > Yacimientos petroliferos fiscales bolivianos (ypfb); the Bolivian > government will conduct a third round of bidding for new concessions on > March 1. > > Oil and gas companies operating in Bolivia have mainly installed their > offices in Santa Cruz de la Sierra, the country's principal economic > center which is also near the heart of the gas fields. Some have smaller > offices in the city of la paz, where ypfb and the major governmental > entities related to the sector--the vice ministry of energy and > hydrocarbons and the superintendency of hydrocarbons-- are located. > > Reform of the hydrocarbon sector > Bolivia's structural adjustment program began in 1985 and has > progressively redefined the respective roles played by the government and > the private sector. The government has generally abandoned its > entrepreneurial role and has become increasingly simply the regulator and > promoter of private initiatives. The hydrocarbons law (1996), the ypfb > capitalization process and the natural gas purchase sales contract signed > with Brazil have all created a new legal framework and market reality > which greatly favors private investment in the hydrocarbon sector by both > domestic and foreign interests. > > The reform has yielded very positive results to date, as can be seen from > the investment commitments made in the capitalization of the pieces of the > state- owned oil company, ypfb. Under bolivia's program of capitalization, > control and 50 percent of the assets of the former parastatal entities > were passed to a strategic partner who presented the most extensive > investment plan to be fulfilled over a fixed period. The remaining 50 > percent of the assets went to pension funds to be held on behalf of all > bolivians over the age of 21 at the time of capitalization, with a small > share going to the employees laid off in the capitalization process. > > Natural gas > Bolivia's most important hydrocarbon resource is natural gas, which can be > consumed domestically or exported. With the opening of gas pipeline Brazil > has become Bolivia's major export market for gas, pursuant to a 20-year > sales contract under which six million cubic meters of natural gas must be > supplied each day at the initiation of exports in April 1999, with the > volume to increase 30 million cubic meters per day by the ninth year of > exports. There is little interest in extending earlier export contracts > with Argentina, which now has its own supplies coming up from the south. > > The contracted demand levels for the pipeline is as follows (in million > cubic meters per day): > 1999 6.0 > 2000 9.1 > 2001 13.0 > 2002 23.0 > 2003 24.6 > 2004 25.7 > 2005 26.9 > 2006 28.0 > 2007 30.0 > > Independently confirmed natural gas reserves in Bolivia as of january 1, > 1998, are as follows (in trillion of cubic feet): > Proven/probable 6.62 > Possible 3.17 > Potential 29.0 > > Oil > At present, virtually the country's entire oil production is consumed by > the domestic market, with the exception of some limited crude oil exports > to Chile. As the gas pipeline comes on line, a growing amount of solids > will become available to the domestic market and for export . > > Oil reserves (measured in million barrels) are as follows: > Proven/probable 140 > Possible 60 > > Recent gas discoveries in Bolivia > It seems that Bolivia will be able to meet its commitment to export up to > 30 mm3/day of natural gas by the ninth year of its twenty year sales > contract to Brazil. Proven and probable reserves will be bolstered by the > likely eventual confirmation of recent discoveries announced by Petrobras > Bolivia s.a., Perez Companc and others. > > - Petrobras Bolivia s.a. recently announced that its exploratory well x-10 > in the San Alberto block (Department of Tarija) had reached 4,160 meters > in depth. Gas mixed with sand was detected at a depth of 3,345 meters. > Following analysis it is estimated that the field's proven reserves could > reach 1 trillion cubic feet (tcf) and an estimated well production > capacity of 35.3 million cubic feet per day. (The exact size of this > reserve has yet to be independently confirmed.) > > - Maxus S.A. has announced the discovery of a reserve containing 2.3 tcf > in calpipendi block in the area of Subandino Sur (located between the > departments of Chuquisaca and Tarija). Drilling at Margarita x-1 had > reached 4,850 meters, with 5,800 meters programmed. While Maxus has > announced that the field's reserves could reach 1 tcf, local sources > suggest that only 0.5 tcf has been found to date. (The exact size of this > reserve has yet to be independently confirmed.) > > - Perez Companc --operator of the Caranda block (located 70 kilometers > from Santa Cruz in the Ichilo province) --has issued a preliminary report > that estimates reserves in this field may reach 1.36 trillion cubic feet > of gas. The discovery was made at 4,300 meters, but a depth of 5,200 is > needed to explore fully the block known as > Huamampampa. The firm has invested us$25 million to reach this depth. > (Local sources claim that the proven part of this block is only 0.2 tcf. > The exact size of This reserve has yet to be independently confirmed.) > > - Pluspetrol announced the discovery of reserves containing 1.7 tcf in the > o'connor huayco block in Subandino Sur in Tarija, the same general area as > the Maxus find. Drilling at Huayco Sur Xlool reached 2,764 meters. > Pluspetrol has drilled eight exploratory reference wells outside the area > drilled over the last six decades by ypfb and standard oil. Local sources > Claim that Pluspetrol's wells missed the structure and That there is no > "discovery". The exact size of this Reserve has yet to be independently > confirmed. > > - Dong Won announced the discovery of a natural gas reserve at 4,738 > meters in Palmar del Oratorio (only 15 kilometers from the city of Santa > Cruz). Exploratory drilling reached a "coat of more than 45 meters > containing highly saturated hydrocarbon sand in the block known as > huamampampa". Initial data indicate that reserves could be as high as 1.7 > trillion cubic feet of natural gas. Local sources claim that in fact the > well failed a subsequent test and that there is no "discovery" here. The > exact size of this reserve has yet to be independently confirmed. > > Investments opportunities > Natural gas > It is estimated that the South American natural gas market of 2.7 billion > cubic feet could reach the 7 billion mark by the year 2005. Thus there > seems to be ample economic justification for the just-completed Santa > Cruz/Sao Paulo/Porto Alegre gas pipeline, even with another pipeline being > built to Brazil from Argentina. Bolivia sits astride the natural > transportation route that will likely lead to significant development in > the future, someday to handle the gas coming from camisea on its way to > Brazil. Additionally spurs are already being planned from the current > pipeline: for example, transredes has a contractual obligation to bring a > pipeline from the present Bolivia/Brazil line to feed a power station > Enron and Shell have built in Cuiaba, Matto Grosso. > > The existing pipeline system of the southern cone is as follows: - Rio > Grande/Santa Cruz/Buenos Aires gas pipeline - Patagonia/Southern > Argentina/Buenos Aires gas pipeline - Brazilian internal gas pipeline > system - Santa Cruz/Sao Paulo gas pipeline (in construction) - Gasandes > gas pipeline from La Mora Aargentina) to San Bernardo (Chile)- transredes > pipeline from Bolivia to Chile. Not all of these pipelines are > interconnected. > > Another potential project is the La Paz-ilo (Peru) pipeline being planned > by wellbros. The contract for the Bolivia/Brazil pipeline requires that > producers extract liquids from the gas prior to export. Thus there will be > a large excess of liquids available for export. The likely markets are in > Peru, Chile and Ecuador, which now import from West Africa, Venezuela and > Mexico. Wellbros is looking to build a 413 km pipeline that would cost > US$155.5 million at current prices. It is still seeking GOB approvals and > financing. > > Companies that are interested in hydrocarbon exploration and exploitation > activities may enter into joint venture contracts with ypfb. These > contracts are awarded through international public bids of hydrocarbon > exploration areas. The most recent bid for free areas took place in > July-September 1998; the next occured March 1, 1999. > > Natural gas industrialization > The production of fertilizer --principally for export to Brazil-- offers > another opportunity for investment, one that fits the GOB's desire to sell > its gas with some value-added. Several investments in the Department of > Santa Cruz are already moving beyond the planning stage. > > Another way to add value-added to Bolivia's gas exports is to convert it > into electricity in Bolivia and then to export the electricity into the > Brazilian grid. Two projects are already being developed in a free trade > zone in Puerto Suarez, located at the Bolivian border with Brazil. The > plants will use gas off the Bolivia/Brazil gas pipeline before it leaves > Bolivia, thus benefiting from various tax incentives provided by the GOB. > > Hydrocarbon transportation > Transportation concessions may be obtained for moving hydrocarbons in > excess of the amount required to fulfill existing contracts with Argentina > and Brazil. > Interested parties can seek gob approval through a specific application > procedure that is both open and transparent. Hydrocarbon-producing > companies may also construct and operate their own pipelines for moving > their gas from the well-head to the national grid or to serve clients who > are newly established. Hydrocarbon transporters are prohibited from > participating in natural gas distribution, nor can they be partners in > electricity generation projects. Transportation tariffs are revised every > four years, and by law producers may participate in the revisions. > > Refining > YPFB operates (recently privatized) three refineries (located in > Cochabamba, Santa Cruz and Sucre) and one lubricant plant in Cochabamba. > The Santa Cruz and Cochabamba refineries were designed to process light > petroleum produced in Bolivia and are thus not adapted to the refining of > heavy hydrocarbons. > > In view of the changes in the composition of Bolivian oil and the lack of > flexibility of the existing refining methods to adapt to these changes, > the GOB plans to offer concessions to install the following processing > plants to interested private investors: > > - high vacuum unit - propane asphalt remover unit - Catalytic cracking > unit > > At present Bolivia's minimal production surplus in solids is exported as > reconstituted crude oil derived from a mixture of reduced crude and > gasoline, which is exported at less-than-international prices and/or used > as fuel. If the above-mentioned plants can be installed, surplus > production would have significantly greater amounts of value-added and the > diesel oil deficit of the domestic market could be significantly reduced. > The installation of the plants would also enable an increase in the > production of gasoline for export. > > Privatization deadlines schedule > - joint venture contracts for new exploration - March 1999 > - natural gas distribution system - December 1999 > - lpg container filling facilities - December 1999 > - aerosol plants - December 1999 > - refineries - December 1999 > - storage of derivative products - December 1999 > Information Source: U.S. and Foreign Commercial Service[Image] > For assistance with exporting U.S. products please contact: > Trade Information Center, International Trade Administration > U.S. Department of Commerce, Washington, DC 20230 > Phone: 1-800-USA-TRADE, > Fax: (202) 482-4473; Email: TIC@ita.doc.gov > Contact the Webmaster at TICwebmaster@ita.doc.gov -- **************** Yours in struggle, ****************