Bolivia Oil & Gas Report Q2 2016: New research report available at Fast Market Research

From: Fast Market Research, Inc.
Published: Tue Feb 16 2016

BMI View : Upstream investment in Bolivia continues at steady levels, but weak reserves of both oil and gas have persisted, creating long-term uncertainty for production and exports. The fall in global oil prices has led to sharp reductions in earnings from oil-indexed gas sales to Argentina and Brazil, on whom Bolivia is entirely dependent for exports. Continued investment in projects to monetise domestic gas resources as through increased local consumption in the residential, power and industrial sectors could result in tightening of the supply-demand picture in the medium term.

Latest Updates And Key Forecasts

Preliminary data from Yacimientos Petroliferos Fiscales Bolivianos (YPFB) shows natural gas discoveries in Bolivia totalled about 1.5 trillion cubic meters in 2015, underscoring the country's below ground promise. However, we caution that significant operational headwinds will persist given the company's shrinking profits and budget amid the global sector downturn. Our outlook for 2016 remains positive with a number of key projects, including first gas from the Ipati and Aquio fields, but we caution that long term growth will be challenging to achieve.

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Preliminary data for H215 from YPFB shows liquids production has averaged roughly 64,000b/d, a 3.5% decline compared to the same period in 2014. These figures are in line with our forecast, which was slightly reduced the previous quarter. We currently anticipate a recovery in output as condensate volumes grow as the Incahuasi gas field and other projects come online from late 2015/2016.

YPFB announced a significant discovery at the Boqueron-Norte well in Yapacani, Santa Cruz in mid-2015. Reserves at the field were estimated at 28mn bbl and officials reported production from the field could begin by 2017 at of 5,600b/d. The discovery holds some upside to our reserves and production forecast, although we await greater clarity on the project before including it in our forecast. The discovery was described as the most significant since 1992 by YPFB, but the modest scale of the total resource in question underscores the challenges facing the outlook for oil.

Underscoring local tensions over hydrocarbons activity in environmentally sensitive areas, environmental activists and local residents staged protest in September 2015 against exploration in the Tarija area. Activists protested against decision to set aside roughly 137,000 hectares of the Tariquia reserve for exploration through contracts with BG, Chaco and Petrobras. Bolivia's decision to open up protected areas to exploration has proven controversial, and underscores pressure on the government to boost reserves amid uncertainty over the sustainability current levels of production and exports.

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