Bolivian President Luis Arce announced that Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), the state oil company, has found a deposit that will open the “second era of Bolivian gas.” “We have discovered a mega-field in the north of La Paz. 1.7 TCF is confirmed [trillones de pies cúbicos] of potential reserves, being the most important discovery since 2005,” he said at the event celebrating the anniversaries of the department of La Paz.
The news raised hopes among Bolivians, who have lived off the exploitation of non-renewable natural resources since 1545, the year in which the excavation of Cerro Rico in Potosí began. At the beginning of this century, Bolivia became the gas supplier to Brazil and Argentina, generating income that formed the basis of the economic boom managed by the governments of Evo Morales between 2006 and 2019. But the fields that were exploited during this period weakened and Bolivia went from producing 60 million cubic meters of gas per day to producing half that. On April 28 of this year, President Arce said that “the gas has run out” and that “there is nowhere to get money from.”
Arce blamed this situation on the bad decisions of Morales and his hydrocarbon ministers during the three governments in which he himself served as Minister of Economy. On July 16, when announcing this new discovery, he did not fail to criticize his predecessor: “Years ago, 500 million dollars were invested in the north of La Paz and absolutely nothing was found,” he said. And he contrasted that figure with the 50 million dollars that it cost, during his administration, to drill the Mayaya Centro X-1 well, which began on November 25, 2022, and which was crowned with success.
Since 2010, Bolivia has invested around 3 billion dollars in the exploration of new gas fields, without any clearly positive results. All the failed wells were located in the south of the country, in the “Southern Subandean Basin”, which was discovered by the American company Standard Oil Company in 1924. This is also where the “mega-fields” were based on the export boom of the past decades. Some geologists believe that this oil basin has already dried up.
The new discovery, however, opens up a new basin, the “Northern Subandino” basin, at the other end of Bolivian territory, and is therefore considered by the government to be the beginning of a “second era.” YPFB president Armin Dorgathen said that together with Mayaya Centro there are “about five structures” that, in total, could contain 7 TCF of gas reserves. Arce mentioned that the entire basin could have around 17 TCF. During the gas boom, around 2014, Bolivia had 10.3 TCF of reserves. The largest gas field in its history, Margarita, had 3 TCF. The current size of the reserves is kept a government secret, so the opposition assumes that it is small. Some experts think it is close to 2 TCF.
The Minister of Hydrocarbons, Franklin Molina, acknowledged that it is necessary to dig “delimiting wells” to know the exact potential of the Mayaya Centro field. He estimated that “between 1.3 and 1.5 billion dollars in investments will be needed to build a gas pipeline and a gas processing plant.” These problems arise from the location of the new field, very far from the traditional oil zone, which is crossed by several pipelines and has the appropriate infrastructure for the exploitation work. The Government thinks that it will take about three years for the new field to begin producing commercially, but in oil industry circles it is said to be about seven years.
Since Bolivia is currently facing a currency crisis and lacks foreign currency to undertake large-scale investments, foreign companies are expected to intervene. Since the nationalization of gas in 2006, they have operated in Bolivia discreetly, taking about 20 billion dollars in profits and reimbursing their expenses. These companies have not wanted to invest “fresh money” in the search for new reservoirs because Bolivian legislation is inclined in favor of the State. The Arce government has talked about “relaxing” these laws, but for now it does not have the parliamentary majority that would allow it to do so.
Last week, Arce received a visit from the President of Brazil, Luis Inácio Lula da Silva, who supported him after the attempted coup d’état on June 26. The main resolution of the meeting between these leaders was that the Brazilian oil company Petrobras would once again play a leading role in the Bolivian extractive industry.
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