According to Oil and Gas Journal (OGJ), Bolivia had proven natural gas reserves of 24.0 trillion cubic feet (Tcf) in 2007. The Tarija department contains over 85 percent of the country’s total reserves, followed by Santa Cruz department (10.6 percent) and Cochabamba (2.5 percent).

In the mid-1990’s, Bolivia privatized its natural gas sector, leading to an influx in foreign investment. The resulting increase in exploration led to a 600 percent increase in proven natural gas reserves from 1997-2005. There have been several important discoveries in recent years, many containing reserves (proven, probable, and possible) in excess of 10 Tcf. The most important of these finds include Margarita (13.4 Tcf), Ipati (12.0 Tcf), San Alberto (11.8 Tcf), and Sabalo (10.8 Tcf). However, since 2003, probable and proven reserves have declined slightly, as exploration has not kept pace with depletion from production.

The development and export of Bolivia’s natural gas reserves has been a controversial issue in the country. There are questions surrounding proposed export paths for liquefied natural gas (LNG), since Bolivia is landlocked. In 2001, Repsol-YPF led a consortium to develop the Pacific LNG project, which included a natural gas pipeline connecting an LNG export terminal to a port in Chile. The plan presented political problems due to a land dispute between Bolivia and Chile dating to the War of the Pacific (1879-1883), whereby Bolivia lost sea access. In 2003, the Bolivian government decided to move forward with the Pacific LNG project, sparking a wave of protests throughout the country that led to the resignation of President Sanchez.

The re-nationalization of Bolivia’s natural gas resources could have an impact on the long-term development of the energy sector in the Southern Cone (Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay). Bolivia’s ability to expand its natural gas exports will depend upon its ability to harness its sizable proven reserves before competing gas sources (LNG, increasing domestic production in Brazil and Argentina, pipelines from Venezuela) entrench themselves in the region. In 2006, Bolivia formally joined a regional pipeline project intended to span South America from Venezuela to Argentina. The viability of such an expansive project is still in question.

Bolivia produced an estimated 466 billion cubic feet (Bcf) in 2006, and consumed an estimated 85 Bcf. Production has risen sharply since 1999, corresponding with the start of natural gas exports to Brazil. Officially, the largest natural gas producer in the country is YPFB; however, the two largest gas fields in Bolivia, San Alberto and Sabalo, which represent one-half of Bolivia’s total natural gas production, are operated by Petrobras, Repsol-YPF, and Total.

Transredes controls the majority of the hydrocarbons transportation network for Bolivia. However, in line with Bolivia’s nationalization plan, YPFB will seek to become the majority partner in all projects originating in Bolivia. The 790-mile northern section of the system connects the cities of La Paz, Oruro, Cochabamba, and Santa Cruz with natural gas fields in the Chapare region. The 1,100-mile southern section of the system connects the cities of Sucre, Potosi, and Tarija with the natural gas resources of the Gran Chaco region; the southern system also connects domestic natural gas resources with export pipeline to Brazil and Argentina.

Bolivia’s gas exports are rising and reached 362 Bcf in 2005.

Brazil is the largest importer of Bolivian gas, importing between 900 million cubic feet per day (MMcf/d) and 1 Bcf/d in 2006, more than two-thirds of Bolivia’s total natural gas exports. In 1999, Bolivia began exporting to Brazil under a 20-year, take-or-pay contract through the Gasbol pipeline. The 2,000-mile Gasbol connects Santa Cruz, Bolivia to Porto Alegre, Brazil, via Sao Paulo. The system has a maximum capacity of 1 Bcf/d. Gasbol also has a 170-mile, 100-MMcf/d extension that connects to a gas-fired power plant in Cuibana, Brazil.

The agreement between the two countries is a take-or-pay contract, meaning that Brazil often must pay for natural gas that it does not actually use. There have been times in the past when, due to dampened economic growth, Brazil has not been able to use the entire volume.

With the nationalization of hydrocarbons, Bolivia and Brazil entered into discussions regarding the price paid for transported gas. In February 2007, Bolivia and Brazil reached agreement for new prices on transported gas: gas destined for Cuiaba saw prices rise 285 percent to $4.20 MMBtu; and Brazil agreed to pay international prices for liquid components (ethane, butane, propane, natural gas liquids, and natural gas gasoline) received in the Gasbol pipeline.

Bolivia began natural gas exports to Argentina in 1972. While significant exports stopped in 1999, the country resumed exporting sizable amounts of natural gas to Argentina in 2004 in an attempt to help alleviate the Argentine energy crisis (see the Argentina Country Analysis Brief for more information). Through October of 2007, Bolivia exported 270 MMcf/d to Argentina and has a contract to export up to 978 MMcf/d by 2010. As is the case with sales to Brazil, Bolivia sought to increase the price it receives from Argentina for natural gas exports. In June 2006, Argentina agreed to increase the price it pays for Bolivian natural gas to $5 per MMBtu from the previous $3.40 per MMBtu. To date, Bolivia has not sought to renegotiate this price.

Currently, Bolivia utilizes the 340-mile, 230 MMcf/d Yabog pipeline for these exports. The two countries have discussed increasing the volume of natural gas exports to Argentina. Such an expansion would require the construction of an additional pipeline, since the Yabog system is at full capacity. To that end, the two announced in August 2006 that they would launch a tender for the $2-billion, 750-mile Northeastern Pipeline. The system will have a maximum capacity of 700 MMcf/d, increasing Bolivian export capacity to Argentina to a level near its export capacity to Brazil. The project will also include a new natural gas liquids (NGL) separation plant in Bolivia that will supply LPG to Bolivian households.