Bolivia caretaker
president faces first major test
By Oscar Laski AFP EL ALTO, Bolivia Petroleumworld.com 06 13 05
New Bolivian President Eduardo Rodriguez faced the first test of his
caretaker government Sunday as he met with leaders of protests that
ousted two of his predecessors. Rodriguez met
for two hours behind closed doors with hardline protest leaders in El
Alto, a La Paz suburb and hotbed of demonstrations demanding
nationalization of Bolivia's vast natural gas
industry. He begged for
"time." "As soon as I get organized with a new
cabinet," he said after the meeting, he would "begin as as soon as
possible" to address the demands of South America's poorest
country. Rodriguez took office Thursday after
Carlos Mesa stepped down following three weeks of sometimes violent
protests, by miners, peasants and coca growers who paralyzed La Paz and
most of the Andean country with marches, strikes and blocked
highways. Bolivia, a gas exporter, faces fuel
shortages because of the protests, which has also triggered food
shortages. Rodriguez, 49, met with protest
leaders in the auditorium of a radio station in El Alto, as demanded by
the leaders. They rejected his invitation to meet at Quemado
presidential palace in La Paz. Afterward, Abel
Mamani, leader of a powerful El Alto neighborhood association,
indicated that there had been a "rapprochement" between the two
sides. | Starting Monday, representatives of
Bolivian civil society will put the protesters' "demands on the
congressional agenda," said Mamani. Protesters would not swerve in
their demand to nationalize the gas industry, he
said. Sunday's meeting was a new sign of
detente after three weeks of protests as poor Bolivians demanded a
larger share of the country's huge natural gas wealth, second in South
America only to Venezuela's. Although protests
have mostly stopped, one union leader told the new president
mobilizations were planned for Monday and
Tuesday. "Mr. President, it is in your hands to
respond and avoid that this continue," Edgar Patana, executive
secretary of the Regional Workers Central of El Alto, said before
Sunday's meeting. Rodriguez was Supreme Court
president when Mesa resigned and two others in the presidential line of
succession rejected the presidency. He promised general elections by
year's end. Mesa was in power only 20 months,
after his predesessor, Gonzalo Sanchez de Lozada, resigned in October
2003 following protests that resulted in 80 deaths, also over Bolivia's
gas. Rodriguez will also have to face demands
of business leaders in the more prosperous eastern provinces who want
greater autonomy.
|
MONTEAGUDO
located in the South of Bolivia has produced gas and condensate since
1964. Production levels are 450 barrels of oil a day and 1.5mmcfd of
gas. Gas from Monteagudo is sold into the Bolivian/Brazil pipeline.
Production is split between 11 reservoirs
The important reservoirs for oil are the Chuquisaca and Saucemayo (the
two deepest), and these are also the most important for gas together
with the Yahua (the shallowest).
The Monteagudo Field (oil and gas) was discovered in 1967 by YPFB with
exploration well Monteagudo X-1, which was drilled to a TD of 3609ft
(1100m). YPFB drilled a total of five Monteagudo wells during 1967. The
field went into production in 1968.
The Monteagudo Field is located in a 30km2 enclave, which is located in
the southern Subandean zone, in Chuquisaca Department, in southern
Bolivia. The Monteagudo Field has produced hydrocarbons from the
Castellon Formation (Middle/Lower Jurassic), the Cangapi Formation
(Lower Triassic), and the Taiguati Formation (Westphalian). Significant
exploration potential exists in the Huampampa sands on the Monteagudo
block. The sands located at 5000 metres are prolific producers in
Bolivia. Market access will decide when these sands are drilled.
David Horgan in Monteagudo
LOCATION Southern Bolivia close to Argentina.
PARTNERS Repsol 50%, Pan Andean 30%, Petrobras 20%
PRODUCTION 450 bbl a day of oil from 11 shallow
wells and 1.5 mmcfd gas
EXPLORATION Huamampampa, Target Depth: 5000 metres
likely to contain gas. Timing dependent on market access.Recent gas
discoveries in nearby blocks by Petrobras, Total, Repsol & British
Gas.
|
Development of El Dorado
In November 2000 the DRDX 1002 well hit gas on the El
Dorado block. The flow rate tested over 10 million cubic feet of gas a
day.An earlier well 2.8 kms away flowed 20 million cubic feet of gas a
day. Proven and probable reserves are over 200 bcf of gas with possible
reserves of over 600bcf. Commitment wells will be drilled which will
aim to prove up and extend reserves during the summer 2004.
Geology
The 995 km2 exploration area lies in the central zone of the Southern
Sub-Andean foothills, 25 kilometres southwest of Andina's Rio Grande
gas field. The primary source rock interval is the middle to upper
Devonian shales, namely the Los Monos, Limoncito and Icla formations.
The primary reservoir intervals are Carboniferous and deep Devonian
sands, the Huamampampa and Santa Rosa formations.
Two wells were drilled in the El Dorado structure during the early
1960's. The first well, El Dorado-1, tested the Devonian at 4,049
metres. El Dorado-2 only reached 3,369 metres, and both wells were
plugged and abandoned as dry holes.In 1965 Gulf opted to drill an
alternative target in the northern part of the block. The Florida X-1
well however, was also plugged and abandoned as a dry hole.
There was no activity on the block until 1980, when YPFB elected to
re-test the El Dorado structure. El Dorado-3 reached a depth of 4,400
metres, but was plugged and abandoned as a dry hole. Bridas were
awarded the block in 1997 as part of the capitalisation process. Their
first move was to acquire 600 km2 of 3D seismic data over the area at a
cost of $4m. This was followed by the drilling of El Dorado X-1001,
spudded in December 1998. The well was drilled to its PTD of 5,850
metres, and subsequently deepened to 6,720 metres. The well tested
around 20 mmcfd of gas and 360 b/d of oil from the Iquiri formation.
The primary objective, the Huamampampa, was not tested.
The initial discovery was followed up by the drilling of El Dorado
X-1002. The well is located 2.8 km from X-1001, and targeted the same
structure to a depth of 4,550 metres, approximately 50-60 metres
up-dip. Test results from the well show a sustainable daily production
rate of 10 mmcfd of gas and 250 b/d of oil condensate, confirming the
presence of hydrocarbon bearing horizons in the Devonian (both Upper
and Lower) and Carboniferous sands. The primary pay zone is the Upper
Devonian Iquiri and Los Monos sands at 4,200 metres. The identical
stratigraphy and similar test results confirm that the gas bearing
zones stretch between the two wells. The two wells cost $22m. The
partners are considering exploring a structure neighbouring the El
Dorado find which, if it contains hydrocarbons may hold about 600bcf of
gas.
It is thought that the reservoir interval constitutes a single body
that stretches between the two exploration wells. Based on this
assumption, technical reserves are estimated to be as high as 500 bcf,
although this figure has not yet been certified by Degolyer &
MacNaughton.
Development of El Dorado
Current production capacity is in the region of 30 mmcfd. Development
plans for the field are at an early stage. It is likely that the field
will be developed in two separate phases.
Gas fields to the north of Río Grande are currently suffering
from capacity constraints. Phase I development of El Dorado aims to
position the field to capitalise on its location, only 25 km from
Río Grande. By tying back the field to the gathering facilities
of the Brazil/Bolivia pipeline, it may act as a swing producer when
such bottlenecks occur. A gas processing facility will be required on
location along with the construction of a 25 km 10" pipeline to
Río Grande. Investment and infrastructure will be required in
order to complete the two wells as producers and tie them back. Phase
II is likely to proceed once a market for El Dorado gas is established.
To enable this, the participants are required to certify the reserves
by an independent party. Further infill drilling is then likely in
order to increase the production capacity of the field. The field is
also located in the vicinity of Santa Cruz, Bolivia's main industrial
centre. Other development include the construction of a small LPG plant
to supply local industry. The partners are currently performing a
feasibility study on the construction of such a plant, with throughput
capacity in the region of 10 mmcfd.
Gas will initially be processed on-site, before being transported to
Rio Grande via a 25km, 10" pipeline. Río Grande is the receipt
point into the Gas Transboliviano (GTB) pipeline. From there the gas is
piped to the Brazilian border and onwards to markets in São
Paulo and beyond. Liquids will be processed on site and trucked to
Santa Cruz.
Current development plans call for a production at 120 mmcfd of gas,
worth $60 million a year at a price of $1.50 per thousand cubic feet,
by 2002. The partners forsee a 95 mmcfd : 25 mmcfd split between
exports to Brazil and domestic sales respectively.
The partners are currently looking at the feasibility of constructing
an LNG plant, with a processing capacity of 10 mmcfd. It is envisaged
that this will supply the local market of Santa Cruz.
Field operating costs are expected to be between US$0.07/mcf and
US$0.20/mcf.
Gas exported to Brazil is subject to a tariff at US$0.23/mcf (2001
terms) for export gas, and US$0.35/mcf (2001 terms) for gas sold
domestically.
The construction of a processing plant on location will cost in the
region of US$3 million. In addition, the 25 kilometre, 10" pipeline
connecting the field to Río Grande will cost a further US$2.5
million. El Dorado X-1002 will be tied back to the facilities at a cost
of US$1.5 million.
The drilling of development wells is estimated to cost around US$4.5
million per well.
Also under consideration is a plan to construct an LPG plant at an
estimated cost of US$5 million.
Block Size
The original block dimensions were 40 parcels by 25 sq kms for a total
of 1000 sq kms. As of March 1st 2001 the consortium entered Phase 2 of
the concession agreement. They handed back to the State 28 of 40
parcels of land. The 12 parcels held include the gas discovery area and
surrounding ground and the oil prone area leading up to the border with
the Rio Seco block, an area covering 125 sq kms. DRILLING
Summer 2004 - 14,000 foot well costing $7 m
OWNERSHIP 10%. Pan American (BP) is the 90% holder.
SIZE 200bcf Proven and Probable with drilling
potential to rise to over 1tcf. LOCATION 25kms from
the Brazilian pipeline provides significant transport savings. PROJECTS
- Long term contract to sell gas to Brazil. -
Smaller scale supply contract to city of Santa Cruz. - GTL plant (Gas
to Liquids).
|
Bolivia hopes sea
access by offering gas to Chile
Source: MercoPress March 25, 2005
President Carlos Mesa said Bolivia is prepared to sell
natural gas to
Chile as long as its neighbour agrees to give this landlocked nation
access to the Pacific Ocean, a Bolivian goal ever since it lost its
coastline to Chile in a 19th century war. Mesa said Bolivia may use its
mammoth natural gas reserves to become "the energy axis of South
America" -- and is willing to share its wealth with Chile if the two
can agree on a "solution to our maritime problem." "There will be no
real regional integration unless Chile agrees to work with Bolivia to
solve the matter of or maritime demand," Mesa said in a speech during a
ceremony marking the "Day of Sea," a local celebration.
Bolivia lost its coastline in a 1879-83 war with Chile, and has since
kept an international campaign to press for its demand to recover
access to the Pacific Ocean -- possibly by getting control of a strip
of Chilean territory that runs to the coast. Chile refuses to cede
control of any part of its land, saying a 1904 bilateral treaty solved
all territorial matters with Bolivia. The two countries do not have
diplomatic relations due to the dispute. Mesa noted that Bolivia’s
natural reserves, estimated at 1.5 tcm, are the largest non-oil related
in South America.
Chile has experienced energy shortages the last couple of
years as a
result of steep cuts in the sales by Argentina. It currently does not
import any natural gas from Bolivia. Mesa repeated his appeal to the
Chilean government to re-start discussions over a possible outlet to
the sea. Sporadic bilateral negotiations through the decades have
failed. "We are prepared to make that discussion in the most reasonable
terms," Mesa said. Both the export of natural gas and demand for sea
access have become sensitive issues in Bolivia.
In October 2003, protesters took to the streets to demonstrate against
a government plan to export gas through a Chilean port because they
understood that Chile would profit from the venture. The violent
demonstrations took the lives of 56 people and forced the resignation
of President Gonzalo Sanchez de Lozada. The opposition to use a Chilean
port forced Mesa to sign an agreement to use a port in Peru instead,
although all technical studies indicated it would be much more
expensive.
|
Bolivia proposes gas
supply to Chile
in exchange for sea access Source: Xinhua 23-03-05
Bolivian President Carlos Mesa said that his country is willing to sell
natural gas to Chile if Chile agrees to provide the land-locked country
an access to the Pacific Ocean. At a ceremony marking the "Day of Sea,"
Mesa said it is necessary to restart negotiations with Chile on the sea
access issue. Bolivia may share its natural gas reserves with Chile if
the two countries can agree on a "solution to our maritime problem,"
said Mesa.
Bolivia's natural gas reserves are estimated at 1.5 tcm, the largest in
South America. Bolivia lost its coastline after being defeated by Chile
in the 1879-1883 war. The country is trying to restore the Atacama
corridor, a key access to the Pacific Ocean. Chile, however, refuses to
cede control of the strip, saying a 1904 bilateral treaty settled all
territorial matters with Bolivia. Decades-long negotiations on the
issue have failed.
Bolivia and Chile downgraded diplomatic relations in 1978 over the
border issue. The two countries maintain commercial relations and have
consulates in each other's capital. |
Hydrocarbons
Bill
Jeopardizes Future Investments
Business News Americas (BNamericas.com) 3/21/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=21234
Future investments by Brazil's federal energy company
Petrobras in
Bolivia's oil and gas industry could be in doubt if the Bolivian
government's proposed hydrocarbons bill is approved by the senate,
Brazil's mines and energy ministry said in a statement. "As it has been
presented by local press, approval of the hydrocarbons law will,
without a doubt, entail serious difficulties for Brazilian investments
in Bolivia," Brazil's mines and energy minister Dilma Rousseff said.
On March 16, Bolivia's lower house re-approved the controversial
article in the bill that sets royalty payments on hydrocarbons
production at 18% and taxes at 32% for foreign companies operating in
the country. The article was approved by a margin of 58 votes to 47
votes. It was the second time the article had been approved since
opposition groups claimed the previous March 4 vote had
"irregularities."
The opposition MAS party, led by Evo Morales, wanted the
government to
charge a 50% flat royalty on all hydrocarbons production.
The article dealing with the royalty-tax issue was the final article of
the 142-article hydrocarbons bill to be passed by the lower house. The
entire bill is now on its way to the senate for final approval.
HANGING TOUGH
For the moment, Petrobras (NYSE: PBR) has no plans to pull out of
Bolivia, but is waiting for the bill's final approval to analyze the
situation, local press reported. "Petrobras has every interest in
continuing in Bolivia. We are awaiting the conclusion of this debate,"
newspaper El Diario quoted company president José Dutra as
saying.
Meanwhile, the president of the Bolivian unit of Spain's
Repsol YPF,
Julio Gavito, has said that if the bill becomes a law, "it would oblige
us to abandon many of our projects and everybody would lose, especially
Bolivia," newspaper La Razón quoted him as saying. "It would
also be necessary to reconsider new investments that we have earmarked
for the next few years," he said. "It is evident that we are not in
agreement [with the proposed bill] and we will present our point of
view to the senate," he added.
|
Pan Andean Spuds
DRD
X-1004 Well in Bolivia
Pan Andean Resources 8/5/2004 URL:
http://www.rigzone.com/news/article.asp?a_id=15353
Pan Andean Resources has started drilling of DRD X-1004 on its gas and
condensate field at El Dorado, near Santa Cruz, Bolivia. The interest
is held through its subsidiary, Petrolex.
The well spuds this week and will be drilled to 4,290 meters (14,100
feet). The operator is our 90% partner, Chaco, which was formerly part
of the Bolivian National Petroleum Company (YPFB) and is now part of
the BP Group. The well is projected to take 90 days, including testing.
Targets are the Petaca sands (approximately 1,600m), the Ichoa
Formation (2,200m), Iquiri and Los Monos (4,000 to 4,500m).
In addition to anticipated exploratory upside, Pan Andean expects to
convert approximately 60% of the currently classified probable reserves
to proven, subject only to development of the Brazilian gas export
market. This equates to 100 billion cubic feet of gas and 1.6 million
barrels of oil-condensate.
Following recent remapping and regional work, technical staff believes
that the DRD X-1004 well may increase the proportion of oil-condensate
contained in future production from the reservoir. Pan Andean also
hopes that significant new reserves may be added to the west of a
geological fault running through the structure.
Pan Andean and Chaco have launched a Gaffney, Cline technical
validation / due diligence review of the Energy Technology
Gas-to-Liquids project. This technology offers a pioneering low capital
cost method of generating diesel fuel from the gas available at El
Dorado. This may offer accelerated access to market.
Managing Director, David Horgan, commented: "The El Dorado X-1004 well
marks a return to vigorous development of our South American interests.
After three years of regional retrenchment, energy demand is bouncing
back. High oil prices make gas-to-liquids projects economic. Pan Andean
hopes that these developments will position El Dorado for early
development as a GTL project and/or to exploit the rapidly recovering
gas demand in Brazil and Argentina".
|
Pan Andean Bolivian
Operations 2005
PETROLEX SA a wholly owned subsidiary of Pan Andean was acquired in
September 2000. A long established private Bolivian company it has
non-operating interests in two Bolivian oil concessions Monteagudo 30%
and El Dorado 10%. Both blocks are joint ventured with oil majors. In
Monteagudo, Repsol is a 50% partner with Petrobras of Brazil holding
the remaining 20%. The El Dorado block is operated by Pan American a
consortium of BP/Amoco and Bridas of Argentina.
Pan Andean produces high quality crude oil and natural gas from our 30%
stake in the Monteagudo Field, in southern Bolivia. The Monteagudo
Field has produced over 37 million barrels of oil since its discovery
in 1968. The field is operated by Maxus, with a 30% stake and is now
owned by Repsol- YPF. Repsol owns an additional 20% stake via its
ownership of the privatized Bolivian oil company Andina. The remaining
20 % is held by Petrobras, the Brazilian semi-state oil company. Oil
output from relatively shallow reservoirs has remained strong. There is
scope to enhance production through work-overs and new infield wells.
Pan Andean owns a 10% stake in the large, strategically situated gas
discovery at El Dorado, some 40 km south of the city of Santa Cruz. We
have been working hard to find a market for the gas to optimize cash
flow from the associated liquids production, including condensate,
natural gasoline, and GTL. Pan American Energy, part of the BP GROUP,
owns the balance of the block. BP has large interests elsewhere in
Bolivia, primarily via the privatized state company Chaco. Pan
American's main current focus is on their Liquefied Natural Gas project
aiming to sell gas form their stake in the mega - gas fields of
southern Bolivia, via a pipeline to the Pacific Ocean and or by tanker
to Mexico and the Californian market. We are working on a number of
options to generate early value added for shareholders from the El
Dorado discovery. The best option is to tap into the nearby gas export
pipeline to Brazil. We are situated within 30 km of the gas gathering
station and appear to have a considerable transport cost advantage.
However, lower than expected volumes into the Brazil gas market has
delayed securing a market in Brazil for the El Dorado Field.
Accordingly our priority is to secure an early gas market and produce
the associated liquids. For this purpose we are working on a gas to
liquids facility, which would process 20 million cubic feet per day of
natural gas. This is the sustainable production capacity today
available from the two discovery wells at El Dorado.
|
Bolivia to hold
natural gas referendum March 28
LA PAZ, Bolivia, Jan 5 (Reuters)
Bolivia will hold a national
referendum on
March 28 on how to develop one of Latin America's biggest gas reserves,
an
issue that last year sparked deadly riots and a massive strike that
toppled
the government. The political turbulence also caused Bolivia to lose
out on an opportunity to export gas to Mexico and California. "Today
finding
markets for our gas is difficult and will mean double the effort,"
President Carlos Mesa said in a televised speech to the nation late
Sunday.
Plans to export the country's massive gas reserves were delayed after
mainly
indigenous opposition to exporting through Chile -- with which Bolivia
has a
centuries-old border dispute -- forced President Gonzalo Sanchez de
Lozada to
quit. Sanchez de Lozada's running mate, Mesa, then became president and
he
promised to hold a binding referendum on the $6 billion gas plan. But
the
project delay led Bolivia to lose out to a competing plan last month.
U..S. power company Sempra Energy signed a 20-year agreement in
December to
buy liquefied natural gas (LNG) from Indonesia. That gas will feed a
planned
LNG terminal in Mexico that will help supply the U.S. market with
natural gas.
"Finding a similar market in another part of the world will be no piece
of cake," Mesa said. Mesa also announced a new energy law that will
increase taxes in the energy sector. Bolivia's original project
envisaged
landlocked Bolivia choosing whether to pipe gas hundreds of miles
either to a
Chilean or a Peruvian port on the Pacific before being shipped to
Mexico and
moved by train to California.
Many Bolivians were up in arms at their gas being piped via neighboring
Chile,
an old enemy after Bolivia lost its access to the coast in an 1879 war.
Indian
groups also said foreign companies would be the only ones to benefit
from the
plans in one of Latin America's poorest countries. Bolivia has 55
trillion
cubic feet of gas reserves, second only to Venezuela in Latin America.
British
Gas , which along with Spain's Repsol and BP Plc makes up Pacific LNG
consortium, says Bolivia could supply nearly a fifth of the energy
needs of
California -- a market similar in size to Japan.
|
Repsol YPF, Petrobras
Strike Gas Exporting Agreement
South American Business
Information 1/2/2004 URL:
http://www.rigzone.com/news/article.asp?a_id=10224
Repsol YPF and Petrobras reached an agreement to slash by 30% the price
of the Bolivian natural gas exported to Brazil, without affecting the
income of the Bolivian Treasury. In exchange for that Brazil would lift
its natural gas taking up to 24 million cubic meters per day during
2004 from the current 18 million cubic meters.
Repsol and Petrobras are partners in the gas fields San Alberto and San
Antonio which supply 70% of the natural gas sold to Brazil, while
Petrobras is the importing company on the Brazilian end.
Following the agreement the gas price at Rio Grande do Sul would lower
from US$1.92 per million BTU to US$1.25 and help the building of demand
at the city gate to have prices dropping from US$3.36 to US$2.70 per
million BTU.
|
Bolivian Govt. to
Consider Regional Markets After LNG Flop
BNAmericas 1/2/2004 URL:
http://www.rigzone.com/news/article.asp?a_id=10216
Faced with the failure of its project to export liquefied natural gas
(LNG) to Mexico and the US, Bolivia should consider the Brazilian,
Argentine, Paraguayan and Chilean markets, as well as North America,
mining and hydrocarbons minister Alvaro Rios said.
"I think that these are markets we should look at, and not dismiss,"
government news service ABI quoted the official as saying. Rios
acknowledged that the task would now be more difficult, although he has
not given up hope of breaking into the North American market. "The
market says that he who knocks first, knocks twice," he said.
"Unfortunately we didn't knock first."
Bolivia's hesitation hit both its investment image and its pocket.
Estimates are that the project would have brought in US$600mn annual
income from liquid hydrocarbons and another US$232mn from gas. The
government itself stood to have gained US$200mn a year in tax revenues,
equivalent to 2.5% of GDP, economic development minister Xavier Nogales
said.
The multi-billion dollar Pacific LNG project, led by Spain's Repsol YPF
and two British companies, collapsed when the country's political
opposition seized on the issue, staging protests against exporting the
gas. The demonstrations led to the downfall of President Gonzalo
Sanchez de Lozada in October.
However, the country has 56 trillion cubic feet of reserves, and Rios
said there is still plenty for export even after the government
encouraged local consumption by making residential connections and
converting cars to vehicular natural gas (VNG). "Gas is super-abundant
both for massive industrialization within the country and also for
export," he said. Nogales added that Bolivia needs a rational and
systematic hydrocarbons export policy, which would give the country
cheap and efficient power to make its industrial production more
competitive.
Losing out on the US-Mexican market was confirmed when the would-be
offtaker, Sempra Energy, signed a supply deal from Indonesia in
December, leaving Bolivia with only Brazil as a current market. Brazil
now has monopoly power to try and reduce prices. Moreover, the country
still has to clarify the growth of its electric power sector, upon
which a large part of its demand for Bolivian gas rests. "We are a
little at the mercy of what they want to do in Brazil with their power
sector," Rios said. "They also have [regulatory] problems, which
drastically affect Bolivia."
According to Nogales, the government proposes three immediate courses
of action: speeding up efforts to find new gas markets, encouraging the
domestic use of natural gas, and diversifying the range of exportable
products along with opening more markets to Bolivian exports.
The government wants to involve state oil company YPFB more closely in
the search for new markets. "We have to start negotiating directly with
countries such as Mexico or the US and not let oil companies be the
ones who decide if they want to buy Bolivian gas to export it," Nogales
said. Meanwhile, President Carlos Mesa is due to announce changes to
the country's hydrocarbons law this Sunday (Jan.4), local press
reported.
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|
Bolivia
refuses to lower gas export prices, quotas to Brazil
OGJ Online, April 29, 2003
BOLIVIA REFUSES to
lower gas export prices
unless Brazil
increases its imports. At an Apr. 28 meeting, Brazilian President
Luiz Inácio Lula da Silva failed to convince Bolivia's President
Gonzalo Sánchez de Lozada to revise the contract under which
Brazil
imports a fixed quota of gas from its neighbor.
"It is very
unlikely that Bolivia will
distance itself
from what was agreed (with Brazil) in good faith in the past. It is
unlikely
that we will change the take-or-pay clause of the contract," said de
Lozada.
However, Brazilian Energy Minister Dilma Rousseff, who also took part
in
the talks, declared, "Brazil will only increase the volume of gas
imported
from Bolivia if the price of the fuel is reduced." Brazil wanted
to revise the take-or-pay clause in the import contract signed with
Bolivia
in 1996. Under that agreement, Brazil pays for a certain quota of
imported
Bolivian gas even if it does not need to import the fuel. Brazilian
officials
claim the take-or-pay provision will cost Brazil more than the present
$150 million/year.
The minimum gas quota Brazil agreed to import
from Bolivia
is 14 million cu m/day. Under the proposal, the minimum quota would be
boosted to 18 million cu m/day by 2004.
However, Brazil currently takes only 11
million cu m/day.
The Brazilian economy is experiencing a severe recession, and it is
unlikely
that Brazil's gas consumption will increase from current levels for at
least the next 2 years, said local analysts. Moreover, Lula's
administration
shelved an ambitious gas-fired thermoelectric project devised by former
President Fernando Henrique Cardoso. Brazilian officials said the
price of imported Bolivian gas has dampened Brazil's demand for the
commodity.
However, Lozada rejected the possibility of reducing gas prices unless
Brazil increases imports.
Bolivia's natural gas reserves are estimated
at 52 tcf,
second in Latin America behind Venezuela. Bolivia's economy depends
heavily
on its gas sales. In addition, Losada faces strong opposition from
powerful
left wing factions in Bolivia that oppose lowering exported gas
prices.
|
BG over
4 tcf
of equity gas in Bolivia
BG is the second largest holder of
gas reserves in the country. BG
has eight exploration/exploitation and retention blocks (which hold
discoveries
that have not yet commenced production) and is a partner in Itau and
Margarita,
two of the largest discovered gas condensate fields in Bolivia.
BG has secured long-term capacity rights in the Bolivia-Brazil pipeline
and is strategically placed to supply gas into the Brazilian
market.
A LNG scheme to supply West Coast US and Mexican markets with BG
Bolivia’s
significant equity gas reserves is being actively pursued.
|
Following the acquisition in December 1999 of
Tesoro
Bolivia Petroleum Company, BG continues to own and operate (100%)
several
exploitation and retention licences containing six gas condensate
fields
– the La Vertiente, Los Suris, Escondido and Taiguati producing fields
and the Palo Marcado and Ibibobo undeveloped discoveries (held in
Retention
– formerly contained in the Block XX Tarija East Exploration Licence).
BG supplies gas to Brazilian markets through two sales contracts:
1.4 mmcmd supply into the Yaciminetos
Petroliferous Fiscales
Bolivianos (YPFB) – Petrobras contract. 0.65 mmcmd supply to
Comgas.
Gas is treated in the La Vertiente processing
plant where
capacity was expanded to 160 mmscfd in 2001 to allow BG to meet
increased
sales to the Brazilian market.
BG’s 100% operations are located in the Gran
Chaco province
of southern Bolivia, approximately 75 km north of the Bolivia-Argentina
border.
La Vertiente
The 375 sq km La Vertiente exploitation block
contains
the La Vertiente, Escondido and Taiguati gas condensate producing
fields.
Production from the La Vertiente gas condensate field began in August
1978
and has continued from two production wells.
Production from the Escondido gas condensate
field began
in October 1989 and continues from four production wells.
The Taiguati gas condensate field came on-stream
in June
1989 and has two production wells.
Los Suris
The 50 sq km Los Suris exploitation block
contains the
Los Suris gas condensate field which has been in production since
August
1999. The field contains four production wells including Los Suris 5,
BG’s
first operated well in Bolivia which has been in production since
2001.
XX Tarija East
Two discovered gas condensate and oil fields,
Ibibobo
and Palo Marcado, have been held as Retention Areas awaiting
development.
The remainder of Block XXTarija East was relinquished at the end of
July
2003.
|
NON-OPERATED
BLOCKS
Itau Retention
Area
BG has a 25% equity interest in the Itau
Retention Area
which contains the giant Itau gas condensate field. BG continues to
evaluate
options to monetise reserves from Itau. The remainder of Block XX
Tarija
West, including the Agua Salada sub-block (BG 100%), was relinquished
at
the end of July 2003.
Partners (%) Itau
Retention 25
BG 41 Total Bolivie (operator) 34
ExxonMobil
Margarita Exploitation
BG has a 37.5% equity share of the Margarita gas
condensate
field which lies in the 874 sq km Margarita exploitation block.
Following
discovery in November 1998, the Margarita X2 and X3 appraisal wells
were
drilled in 1999. Further field appraisal has included a long-term
production
test of the Margarita X3 well in the first quarter of 2001 and the
acquisition
of 1 096 sq km of 3D seismic in late 2001.
In November 2002, BG and partners approved the
construction
of the Margarita Early Production Facilities to deliver gas to the
Brazilian
market. The construction contract was awarded in May 2003 and in June a
horizontal sidetrack of the Margarita X1 well was completed as a
production
well. First gas is scheduled for April 2004.
Partners (%) Margarita
37.5 BG
37.5 Maxus (Repsol YPF) (operator) 25 Pan American
Energy
Caipipendi
The Caipipendi exploration block contains several
large
gas condensate exploration leads and prospects which are being
evaluated.
Partners (%) Caipipendi
37.5
BG 37.5 Maxus (Repsol YPF) (operator) 25 Pan American
Energy
Charagua
BG has a 20% equity interest in the 787 sq km
Charagua
block which contains the Itatiqui Retention Area. BG farmed out its 20%
equity in the Itatiqui discovery in April 2001.
Partners (%) Charagua 20
BG 50
Chaco (Pan American) 20 Maxus (Repsol YPF) (operator) 10 El
Paso
|
BG and its partners in the Margarita field
formed the
Pacific LNG (PLNG) consortium in 2001. PLNG is seeking to sell gas into
the west coast of the USA and Central American markets. This project
would
involve the transportation of gas across the Andes to a liquefaction
plant
on the Pacific coast and onward shipping to regasification facilities
in
Mexico prior to onward transport to the USA and other markets. This is
one of a range of options that BG is pursuing to monetise Bolivian
reserves
in North, South and Central America. |
10,000
b/d gas-to-liquids plant near Santa Cruz Study
OGJ Online, April 04, 2003
THE GTL BOLIVIA SA group and Rentech Inc.,
Denver, have
completed the technical portion of a joint study to determine the
feasibility
of building a 10,000 b/d gas-to-liquids plant near Santa Cruz,
Bolivia.
The companies now are examining the project's
marketing
and economics and expect to complete the studies by May 31. Preliminary
indications show favorable economics for the project, the companies
said.
Under a licensing memorandum of understanding
signed last
year, the proposed plant primarily would use Rentech's patented GTL
technology
process to make sulfur-free fuels (OGJ, Oct. 7, 2002, p. 8).
|
3,150
km Bolivia-Brazil natural gas pipeline
OGJ Online, February 25, 2003
In other recent company news: El Paso Corp.'s
Brazilian
subsidiary will sell its shares in the 3,150 km Bolivia-Brazil natural
gas pipeline, according to Eduardo Karrer, president of El Paso do
Brasil.El
Paso is one of the few shareholders in the Bolivia-Brazil gas pipeline
that doesn't own gas reserves in Bolivia.
Oil&Gas Journal, February 17, 2003
The second major question concerning gas reserves
is
whether, during the next 20-30 years, gas exploration programs are
going
to yield 50 or so new gas provinces equivalent to the one in southern
Bolivia,
or no more than a dozen. The second figure appears more likely.
|
The Pluspetrol chief noted that the
Bolivia-Brazil gas
pipeline sparked a flurry of exploration and development in Bolivia.
That
E&D flurry has yielded such vast gas reserves that the country is
mulling
an LNG export project to monetize gas discoveries that the export
pipeline
can't accommodate any time in the foreseeable future.
Rey pegged Bolivian gas reserves at 50-60 tcf,
up from
a mere 4 tcf discovered prior to the development of the Bolivia-Brazil
export pipeline.
Rey said that Peru's gas potential compares
favorably
with Bolivia's, with large underexplored basins such as the Ucayali
(home
to the Camisea gas fields) and Madre de Dios on trend with the
world-class
gas reservoirs found in neighboring Bolivia.
In response to queries from the Ingepet
audience about
the potential for a Peruvian LNG export project incorporating Bolivian
gas as well, Suellentrop said, "It is not in Peru's best interest to
move
the project south." Rather, "The Bolivians should follow our project.
We
have economies of scale and shipping advantages that the Bolivians must
envy."
Incorporating Bolivian gas would entail not
only incurring
additional costs of moving the project farther south along Peru's
coast,
moving it farther from market, but "the Bolivians would have to place
twice
as much gas to justify the added infrastructure."
Suellentrop suggested that tacking on the 8
million tonnes/year
that incorporating a Bolivian scheme would entail would overwhelm the
available
market. He likened Peru's LNG export initiative to the successful model
established by Trinidad and Tobago, whose Atlantic LNG export project
is
being developed on a phased, single-train module basis. |
Bolivia
Orca Petroleum
exp
By OGJ editors HOUSTON, Aug. 15 Orca Petroleum Inc., Calgary, acquired with
YPFB approval
a 12.5% working interest in the Villamontes Block in southern Bolivia
for
$287,500 and is seeking other oil investments in the country. Operated
by Matpetrol SA, a Bolivian operator for 40 years, the block yields 40
b/d of oil and has made 703,000 bbl of oil from Upper Carboniferous San
Telmo since the first discovery in 1987.
Block participants plan to sidetrack an existing
well
bore to penetrate San Telmo 30 m higher than existing wells. Outside
engineers
attributed 629,000 boe of proved and probable reserves to the San Telmo
and Permian Cangapi reservoirs as of Jan. 1, 2001. |
World
Bank to Disburse $19.5 Million to Bolivia Following Progress in
Regulatory
Reform
News Release No:2003/028/LAC
Contacts: Alejandra Viveros (202) 473-4306
Aviveros@worldbank.org
Lee Morrison (202) 458-8741 Lmorrison1@worldbank.org For
more
information on the credit:
http://www-wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000178830_98111703531865
Washington, July 19, 2002- The World Bank
today announced
it will disburse all $19.5 million of remaining funds from a
Regulatory
Reform Sector Adjustment Credit to the Government of Bolivia. The
decision
to disburse the second and final tranche of the credit follows
Bolivia’s
progress in a series of reforms to strengthen its banking system,
promote competition in the telecommunication and energy sectors,
and
support economic development.
" The Government of Bolivia has made
significant gains
aimed at improving its economic environment and supporting the
objectives
of the Regulatory Reform Program," said John Newman, World Bank
Resident
Representative in Bolivia. "Although Bolivia is still recovering from
an
economic crisis and there are enormous social needs to address,
we
are confident that the reforms undertaken will help Bolivia meet
these challenges as well as promote long-term economic
development".
The Regulatory Reform Sector Adjustment Credit
(SAC) was
approved in November, 1998 for a total of $41.8 million from the
International Development Association (IDA), the World Bank's
preferential
lending arm that provides interest-free credits to the poorest
countries.
The SAC is helping Bolivia strengthen the stability and
efficiency
of the financial sector, improve coverage, quality and productivity of
key infrastructure services, and maintain an independent
regulatory
system that both facilitates and promotes economic efficiency and
competition.
Under the SAC, the Government has implemented
legislation
to strengthen bank resolution mechanisms and facilitate
corrective
actions for troubled financial intermediaries, enacted regulation to
promote
competition in the telecommunication and energy sectors and has
improved
its macroeconomic management despite being in a difficult
economic
climate. |
Bolivia
one of the poorest countries in Latin America
With a GDP per capita of around US$1,000 and
social indicators
similar to Sub-Saharan Africa countries, Bolivia is one of the poorest
countries in Latin America. About two-thirds of the Bolivian population
is poor, with low levels of education, health and nutrition. The
average
schooling completed is less than seven years, infant mortality stands
at
69 per thousand live births, and 10 percent of the children under five
are malnourished.
Bolivia is landlocked, and its poorly
developed communications
infrastructure limits its access to export markets. After significant
macroeconomic
stabilization and structural adjustment efforts started in 1985,
supported
by the International Development Association (IDA) and International
Monetary
Fund (IMF), twelve-month inflation fell from a peak of 23,500 percent
in
1985 to less than 4.5 percent by end of 1998. International reserves
and
foreign direct investment have increased significantly. And the
external
debt burden-while still high-has eased, thanks to the HIPC initiative
Bolivia
was the second country to reach the completion point under this
initiative
in September 1998. See Report and Recommendation of the President of
the
International Development Association to the Executive Directors on
Assistance
Strategy to the Republic of Bolivia under the HIPC Debt Initiative
(Report
No. P7260-BO), Memorandum of the President, September 4, 1998.
But Bolivia is a segmented society, with
insufficient
investment, weak institutional capacity, and entrenched vested
interests
hampering the private sector. It is a good example of a country that
has
achieved successful stabilization and implemented innovative market
reforms,
yet made only limited progress in the fight against poverty.
ECONOMIC DEVELOPMENTS
The country's economic performance in 1998 was
broadly
in line with the IMF–Enhanced Structural Adjustment Facility (ESAF)
program.
GDP grew at an annual rate of 4.7 percent despite the adverse effects
of
El Niño. Inflation fell to 4.4 percent. The non-financial public
sector deficit was 4.1 percent. And international reserves increased
more
than expected (by US$125 million). But, an important weakness in
macroeconomic
performance was the current account deficit, which reached nearly 7.9
percent
of GDP, mainly due to large foreign direct investment (FDI). The surge
in FDI will have to be monitored closely to prevent overheating the
economy
or eroding investor confidence. Authorities agreed in the ESAF program
to a tighter fiscal stance for 1999 and beyond if the current account
deficit
is larger than envisaged in the program.
Instability in international markets and lower
growth
prospect for its neighbors have hit economic activity in Bolivia, with
growth appearing to have slowed down significantly in the first months
of 1999. And although inflationary pressures continued to abate,
exports
and imports fell by 13 and 8 percent, compared to the first two months
in 1998. Exports of natural gas to Brazil through the pipeline have
been
delayed pending the contract with the importing Brazilian company.
Fortunately,
FDI has remained robust, though it ended its upward climb. All IMF-ESAF
financial benchmarks were met for the first quarter, but there are
signs
of credit tightening: commercial banks reduced their liquid deposits in
the central bank, and international reserves declined by some US$70
million.
In mid-May, the Banco Boliviano Americano (BBA) bank was intervened by
the authorities. Weaker than programmed tax revenue (partly due to the
economic slowdown) has been more than compensated by the containment of
expenditures. The original overall public sector deficit target of 3.9
percent of GDP is still viable.
Bolivia faces a tough fiscal challenge in the
short and
medium term due to the large reform agenda and fiscal costs from
previous
structural measures—notably pensions— which accounted for 4 percent of
GDP in 1998. Bolivia will have to undergo a fiscal adjustment of the
non-pension
balance of the non-financial public sector from zero to a surplus of
1.5
percent of GDP by the year 2002. The resulting reduction of the overall
deficit below 2 percent of GDP will help to: (i) reduce domestic
deficit
financing, thus capitalizing on the increased private savings resulting
from the pension reform; (ii) prevent the FDI boom from overheating the
economy; and (iii) lower the foreign debt burden to ease the transition
from concessional financing. Continued fiscal discipline, as envisioned
in the IMF–ESAF program, will allow Bolivia to maximize the benefits of
a series of rescheduling with bilateral creditors and the debt relief
under
the HIPC Initiative.
POLICIES ISSUES
The Public Expenditure Review
In April 1998, the donor community asked the
Bank to prepare
a PER for the 1999 CG meeting, as perspective on the role of external
assistance
in the public expenditure program. The PER was extended to also include
tax issues, which were covered by IMF staff. The previous PER had been
carried out in 1992, predating many of the structural reforms. The main
thrust of the 1992 report was to recommend lower direct state
involvement
in productive activities through its public enterprises.
Since the last PER, Bolivia staged
comprehensive reforms—moving
the government from direct involvement in production to a regulator of
public services. The 1999 PER found that public enterprises shrank from
25 percent of GDP in 1995 to 8 percent in 1998, and they are expected
to
be at less than 2 percent by end of 1999. And great strides have also
been
made in increasing revenue collection from well below 10 percent of GDP
in the mid-1980 to 15 percent in 1990 and to 19 percent in 1998. The
PER
also found that, contrary to donors' concerns, Popular Participation
(started
by the previous administration) is functioning well, and
decentralization
is enhancing efficiency and making mayors more accountable to their
constituents.
The main issues identified in the PER
are:
<>Two main fiscal challenges: increase the
non-pension fiscal balance to
prepare for the reduction of concessional aid in the coming
years.
Insufficient operations and maintenance funds across the public
sector.
Low health expenditures by international
standards.
For decentralization to be sustainable, it is important to maintain
strict
limits on sub-national debt, a new role for prefectures, and a
modified political process for mayors (too much
rotation).
The cumbersome complementary regime to value added tax, which needs to
be replaced with a simple-personal income tax with a wide base,
as part of an integral package of tax
reform.
The much needed expansion plans for the road network should be adjusted
within fiscal constraints and increasing private participation.
CAS Implementation
The implementation of the Bolivia CAS has
proceeded as
planned (see detail in Annex 2). Wherever possible, this section and
the
annex attempt to assess progress with regard to outcomes. Nevertheless,
it is currently difficult to measure outcomes of each of the pillars,
given
that the CAS has been under implementation for less than a year and
that
many of the older projects in the portfolio need to be "retrofitted"—a
task envisioned during the initial phase of the pilot—to incorporate
clear
pillar outcomes. Five projects were approved in FY98, and four are
scheduled
for FY99. These operations have been addressing the main constraints,
identified
in the 1998 CAR. They include support to the Government's efforts to:
Consolidate the implementation of the regulatory
framework, with laws
and
the full staffing of 9 superintendencies in the financial
and
infrastructure
sectors.
Strengthen the financial sector through
enhanced regulatory oversight
and
bank provisioning and a law to enable swift banking
resolution
mechanisms.
Establish a sustainable mechanism for maintenance of the national road
network and hence, improve road conditions—in recent years
all
periodic maintenance has been supported by Bank interventions; between
the end of 1997 and 1998, there was an increase of 50
percent
(although from a small base) in the amount of the national network
under
good
maintenance.
Finance rural investments stemming from popular participation
through
the
FDC—more than US$ 1.5 million in rural investments were
realized through Bank support since the CAS was discussed last
year.
Adopt a strategy to deal with corruption and weak governance
(Annex
3).
Support education reform through greater participation of parents'
associations,
greater efficiency in the sector and implementation of
the transformation process—during 1998, Bank support resulted in
improving
the student/teacher ratio in primary education to 23, and
consolidating
the advances in the transformation process with 46 percent of all
primary
schools in the country currently
participating.
Build judicial capacity and credibility of the judicial branch through
the appointment of the Judicial Council, the Ombudswoman and
seven Supreme Court
Judges.
Improve coverage and quality of basic services
—Bank interventions
helped
to increase the safe rural water supply coverage from 37 percent
at
the end of 1997 to about 39 percent by March 1999.
As a result of the transition to the new
administration
and ongoing institutional changes, such as decentralization, IDA's
portfolio
in Bolivia deteriorated significantly last year. At the end of FY98,
there
were five problem projects in our portfolio. Following project
restructuring
and exemplary pro-activity from part of the Government of Bolivia, a
notable
improvement of IDA's portfolio has been achieved, reducing the number
of
problem projects currently to one.
The three operations being presented to the
Board in June
1999 include the Health Sector APL, the first project for Bolivia
explicitly
designed under a results-oriented framework, the Institutional Reform
Project,
and the Abapo-Camiri Road Project. These operations are also in line
with
the recommendations in the CAR to support the Government's efforts to:
Radically restructure the civil
service.
Improve the transparency of customs and tax
administration.
Improve the physical infrastructure through the construction and
maintenance
of roads.
Although there have been very few changes from
the time
of the CAS, we are currently preparing a Learning and Innovation Loan
(LIL)
for environmental management which was not originally envisaged in the
program. While we were preparing the CAS in early 1998, the Bank was
asked
by the Government to limit our involvement in the critical area of
environment
to non-lending services, because of large undisbursed resources from
the
Inter-American Development Bank (IDB). Eighteen months since the
initial
discussions, however, there has not been enough progress in the
monitoring
and environmental planning associated with upstream explorations
brought
about by the Bolivia-Brazil pipeline which was inaugurated in February
1999. During the Environmental Dialogue that took place in April, this
was also identified as a priority. Therefore, during the last quarter
of
FY99, preparation was initiated for a LIL to address this issue through
capacity building at the Vice Ministry of Energy as well as through
establishing
participatory practices to involve civil society in monitoring.
Another change has been a much stronger
emphasis in including
indigenous leaders in the design and the monitoring of our projects as
well as in the articulation of a long-term development strategy for the
rural communities, including the Altiplano. Many past development
efforts
by the Bank and the Government have relied on a top-down approach,
thereby
failing to address the self-defined needs of indigenous peoples. The
Bank's
new approach for rural areas is to promote the active participation of
indigenous populations and directly strengthen the organizational
structure
of indigenous communities to design, implement, and manage projects. In
doing this it has become clear that regional and ethnic sociocultural
factors
are an important factor in enabling indigenous communities to take an
active
role in attacking poverty. One input into this approach has been a
rural
productivity study, recently completed by the Bank, which provides
recommendations
for including Bolivia's rural poor in a process of more inclusive
economic
growth. The study recommends various measures for reducing poverty by
revitalizing
productivity and local economies, production diversification and income
generating strategies as central pillars in a rural strategy. Applying
this approach by involving the active participation of indigenous
peoples
as discussed above will help promote an effective strategy for reducing
poverty and promoting inclusive economic growth at all levels of
society. |