WEB site of the US Dept. International Trade  Administration  (BOLIVIA
    : Hydrocarbons Sector)

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>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
>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: <mailto: TIC@ita.doc.gov>TIC@ita.doc.gov
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>TICwebmaster@ita.doc.gov>TICwebmaster@ita.doc.gov
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Yours in struggle,
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