Brazil risks running out of Bolivian gas; Petrobras deliberates alternatives

According to experts, a lack of investment threatens Bolivia’s status as a natural gas exporter, and the country could become an importer by 2030. However, the government rejects these predictions, citing plans for at least US$ 325 million in exploration and prospecting for new wells by the state-owned Yacimientos Petrolferos Federales de Bolivia (YPFB), which is currently Brazil’s largest external gas supplier.

Through the Brazil-Bolivia Gas Pipeline, Brazil imports 30% of the liquefied natural gas (LNG) it consumes. After price renegotiations, Bolivia has once sent 30 million cubic meters a day to the neighboring country. This amount increased to 20 million m³ per day in May of last year.

With the possibility of a lack of Bolivian supply on the horizon, Petrobras has accelerated the completion of Route 3 of the pre-salt gas pipeline and is looking for alternatives with other producers, such as those in Argentina.

La Paz admits that “between 2015 and 2016,” there was a decrease in output. From January to November 2022, Bolivia exported $2.75 billion in gas, with Brazil being one of its largest buyers. After that, however, sales have been declining.

Not for internal consumption

According to a study by the consultancy Wood Mackenzie, gas production in Bolivia will not even be enough in a few years to supply domestic consumption.

“We are going to invest heavily in something that will transform the production of natural gas in Bolivia, with one of the greatest efforts in our country’s history, which will allow us to find new mega fields,” YPFB president Dorgathen Tapia said in a note in response to the Wood Mackenzie study. The state-owned company is preparing to explore 32 prospected areas in Bolivia’s south and east.

“Saying we’re out of gas is a miscalculation,” Tapia continued. “Despite the natural decline in production, this situation is about to be reversed as we start drilling new wells and discovering other reservoirs. We’re working on it,” said YPFB’s president.

Unsuccessful operations

Wood Mackenzie, however, reports that the latest operations have been unsuccessful. In 2021, the state-owned company planned to explore 20 wells in the country, but it drilled only 3 – and they were dry.

“Our research indicates that operators have reduced their spending in Bolivia due to failed campaigns to increase production, especially in already established fields,” Wood Mackenzie said in response to a written inquiry.

“Furthermore, more recent efforts have not shown the desired results. Two or three high-potential exploration wells failed,” the consultancy said.

According to analysts at the British consultancy, total gas exports from Bolivia have fallen by approximately 40% since 2015. “We expect declining rates at this pace in the short term,” analyzed Wood Mackenzie, noting that domestic gas demand in Bolivia tends to grow in the same period.

Source: Valor Econômico

To read the original reporting, please access: https://valor.globo.com/mundo/noticia/2023/01/29/brasil-corre-risco-de-ficar-sem-gas-boliviano-e-petrobras-busca-saidas.ghtml?li_source=LI&li_medium=news-page-widget

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