Bolivian president Luis Arce, announced on September 1st. that the country’s natural gas reserves have been depleted, and exports to Argentina and Brazil will be interrupted, leaving a massive hole in the economy of the country.
“We have hit rock bottom,” Arce said in a speech in the city of Oruro, where he highlighted that governments and mayors have stopped receiving money from gas exports, which allowed them to pay for social welfare and cover debts.
Arce served as the Minister of Economy during Evo Morales’ government (2006-2017, then again in 2019). During that period, the gas reserves accumulated by previous neoliberal governments were overexploited. Under the conservative governments vast gas fields were discovered.
Exports reached 60 million cubic meters per day to both Argentina and Brazil, generating revenues of over US$ 35 billion. However, according to experts, the ruling populist governments did not invest profits intelligently, and it is now estimated that Bolivia will become entirely dependent on gas imports for domestic consumption starting in 2029.
This will be an additional burden for the South American landlocked country, which already spends on imported gasoline and diesel, raising the total cost of hydrocarbons to US$ 5.7 billion per year.
With the depletion of natural gas reserves, the government of Bolivia is racing to avoid fines for non-compliance with export contracts. According to the current agreement with Argentina, sales should be maintained until 2026, and Bolivia would have to pay compensation and fines for not sending the committed volumes, as happened in the last two years.
The president Arce administration wants to propose an addendum to this contract. According to the president of the Argentine state-owned oil company Enarsa, Agustín Gerez, Bolivia’s state-owned YPFB has offered an “interruptible contract,” meaning it will only send gas as long as it has the hydrocarbon.
“YPFB has notified us that it intends to sign an interruptible contract. This means: ‘I will send you gas if I have gas, and if I don’t, I won’t send it to you.’ This puts the entire supply of gas for northern Argentina at risk,” Gerez said, according to the Argentine news outlet Urgente24.
According to the Bolivian newspaper El Diario, President Arce forgot to make a “mea culpa” for the hydrocarbon policy that began in Morales’ government in 2006 when he “nationalized” oil.
Source: Merco Press