Man with a plan: Saul Avalos
Bolivia primed to pump up volume
Bolivia aims to boost natural gas output by 6 million cubic metres per day this year on the back of $1.5 billion in investment from state-run YPFB and foreign energy companies, Energy Minister Saul Avalos said.
The planned investments would allow Bolivia to increase production by roughly 15%, Avalos told Reuters in an interview.
"We've got $1 billion that (the state) has given to YPFB ... And the investments from the (private) operators that will amount to over $500 million," he said.
Leftist President Evo Morales nationalised Bolivia's energy industry in 2006, arm-wrestling foreign energy companies, including Brazil's Petrobras, Spain's Repsol and France's Total into paying more taxes.
The nation's goal is to double natural gas output by 2014 from the current 40 MMcmd, he said.
Avalos, who took over the energy ministry in the middle of last year, said that, as well as the expected $1.5 billion in investments, Venezuelan oil company PDVSA has agreed to spend heavily in exploration and the Morales government is in talks with Russia's energy giant Gazprom about investments in the landlocked country.
Regarding state-run YPFB's growth plans, he said that $360 million would be invested in exploration and drilling.
He added that $125 million would be spent in reopening 39 oilfields that he said private energy companies shut down in the past because they were too expensive to run.
Energy experts have been skeptical about Bolivia's energy expansion plans in the recent past, saying that investments announced by YPFB and private companies rarely materialise.
Bolivia has not significantly increased its natural gas production since Morales took office three years ago.
Avalos said that demand from Brazil and Argentina and buyers within Bolivia will match the country's current output of 40 MMcmd.
"In 2009 all (the natural gas) that we are going to produce will have a market," Avalos said.
Last week, Brazil decided to cut imports of natural gas from Bolivia to 24 MMcmd from around 30 MMcmd as heavy rainfall allows the country to turn off some thermal plants and produce cheaper hydroelectricity instead.
Avalos assured Reuters that Bolivia would be able to supply Brazil with 24 MMcmd throughout 2009, send 6 MMcmd to Argentina and 5.8 MMcmd to the internal market. Bolivia will also send up to 2.2 MMcmd to the thermoelectric Cuiaba plant in Brazil under a separate contract, he said.
A further 2 MMcmd will be needed as fuel to keep Bolivia's energy industry running.
Avalos said Bolivia was looking for new export markets in Paraguay and Uruguay and that it hoped to be able to export up to 6 MMcmd to the two countries by 2016, but major investments would be needed to build pipelines.
Regarding a deal to almost quadruple exports to Argentina, signed in 2006, Avalos said he was confident Bolivia would be able to export 27.7 MMcmd to its wealthier neighbour by 2014, but only if Argentina builds a new pipeline.
Avalos urged UK supermajor BP to hand over control of natural gas producer Chaco to the Bolivian government soon, or else Morales could seize control of the company, as he did last year with pipeline company Transredes, previously controlled by Ashmore Energy International .
Morales ordered BP subsidiary Pan American Energy to transfer shares in Chaco to the Bolivian government so that YPFB, which holds a 49% stake, can become a majority shareholder.
"They haven't done it yet. The Bolivian government has been waiting patiently, but everything has a limit," said Avalos.