Bolivia: Bolivia Energy Profile 2011

Related Reports: Bolivia Oil and Gas Analysis Q1 2011

Mining has long been the mainstay of Bolivia's economy, and accounts for around 10 % of the country’s GDP. It employs many of the country's industrial workers and accounts for by far the largest part of the nation's legal export earnings. Zinc, gold, iron ore, and tin are the chief non-fuel minerals produced. In fact, even though its deposits are fast being depleted, Bolivia still ranks as a leader in tin production, with metal deposits lying high in the Andes Mountains. Other minerals include antimony, copper, tungsten, silver, and lead. Many of the mines are located at very high elevations, making production difficult and costly.

Bolivia produces petroleum and natural gas in the eastern lowlands, especially around Santa Cruz. The country is virtually self-sufficient in petroleum and has large amounts of natural gas. Petroleum, natural gas, and gold are also found in the Oriente. Combined together, these supply about 90% of Bolivia’s energy requirements. Most of the gas is exported, mainly to Argentina.

Oil and Gas Analysis Q4 2010

In terms of natural gas, the region in 2010 will have consumed an estimated 209bn cubic metres (bcm), with demand of 252bcm targeted for 2014. Production of an estimated 221bcm in 2010 should reach 247bcm in 2014, and implies 5bcm of net imports at the end of the period. Bolivia’s share of gas consumption in 2010 is an estimated 1.29%, while its share of production is put at 5.98%. By 2014, its share of gas consumption is forecast to be 1.26%, with the country accounting for 6.65% of supply. For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl, +36.4% year-on-year (y-o-y). Risk is now clearly on the downside, thanks to the slow progress made during June. However, a full-year outturn in excess of US$80 remains a strong possibility and we see no need to review our assumptions at this point. The 2010 US WTI price is now put at US$87.63/bbl. BMI is assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.

For 2010, the assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put at US$83.53/bbl, up 41% from the previous year’s level. Bolivian real GDP growth in 2010 is assumed by BMI to be 3.9%, with a 3.5% average annual increase forecast for 2010-2014. There is increased state control of oil and gas operations, thanks to government policy that supports re-nationalisation.

This means that the burden of development falls heavily on stateowned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and its few remaining international oil company (IOC) partners. We are assuming oil and gas liquids production of no more than 58,000b/d by 2014, and the country is expected to pump 55,000b/d in 2010. Consumption beyond 2009 is forecast to increase by around 2.0-3.0% per annum to 2014, implying demand of 61,000b/d by the end of the forecast period.

Between 2010 and 2020, we are forecasting a decrease in Bolivian oil production of 5.3%, with crude volumes peaking in 2012 at 60,000b/d, before falling steadily to 52,000b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2019 is set to increase by 24.3%, with growth slowing to an assumed 2.0% per annum towards the end of the period and the country using 67,000b/d by 2019. Gas production is expected to rise gradually, from an estimated 13.2bcm in 2010 to a peak of 16.4bcm in 2013/14, before slipping back to 14.8bcm by 2019. With demand growth of 42.3%, this implies that export potential will fall from a forecast peak of 13.4bcm in 2013 to 11.0bcm by 2019.