"The Demise of Bolivia's Gas Deliverability
Bolivia's political instability since 2002 has culminated in the election of President Evo Morales and the nationalization of Bolivia's hydrocarbon sector. As a result, energy investment has ground to a virtual standstill, with implications for gas supply across the Southern Cone. Even in the unlikely event of an early return of investment to the sector, significant results before 2008 are improbable.
* Assuming no new investments in exploration and production, Bolivian gas deliverability would fall short of contracted demand by as much as 8.2 million cubic meters (290 million cubic feet) per day by 2010, leading to export restrictions.
* Current players might continue essential investments in the short term that could help to maintain current levels of deliverability but would fall far short of any newly contracted volumes. Investment from new players, such as Petróleos de Venezuela SA, is unlikely to bear results before 2008.
* Investment in new export transport infrastructure, such as the Bolivia-Argentina Gasoducto de Noroeste Argentario pipeline, would likely amplify tensions between Bolivia and its regional partners because of the country's limited gas deliverability capacity, thereby intensifying disagreements over prices, further souring bilateral relations, and introducing additional uncertainties about future supplies to existing markets.
* Facing a shortage of foreign investment, Bolivia could be tempted to welcome PDVSA's involvement, should the Venezuelan company offer the much-needed capital. Although this could yield political benefits for both Venezuelan President Hugo Chávez and Morales, it would have dramatic impacts on Bolivia in the medium term and would likely intensify Brazil's quest for energy security, pushing the country to increasingly diversify gas supply away from Bolivia."
