New Energy market report from Business Monitor International: "Bolivia Oil & Gas Report Q3 2016"
[ClickPress, Thu May 12 2016] Upstream investment in Bolivia continues at steady levels, but weak reserves growth of both oil and gas persist s , 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.
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Latest Updates And Key Forecasts
Preliminary data from Yacimientos Petroliferos Fiscales Bolivianos (YPFB) shows natural gas discoveries in Bolivia totalled about 1.5trn 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.
The start-up of national oil company YPFB's virtual LNG supply project in Bolivia on February 15 marked an important change in the country's domestic energy makeup. As the first such project of its kind in Bolivia, the USD144mn Rio Grande LNG facility will support growing demand for gas in rural communities which lack access to the country's vast resource due to a insufficient pipeline connectivity.
In February, the Bolivian government signed a much-anticipated series of agreements with Russian oil and gas major Gazprom covering exploration, production and transportation of hydrocarbons as well as construction and upgrading of associated infrastructure. The memorandum also included updates to Bolivia's natural gas development plan through 2040, implying added involvement by the Russian firm.
In March, the joint venture between PdVSA and YPFB to drill the Lliquimuni C X-1 well in the La Paz region came up dry, with the well failing to yield any commercially viable quantities of oil and gas. The project had been touted as highly promising by President Evo Morales prior to its development.
Bolivia's fiscal position will deteriorate in the coming year, as substantial reductions in oil revenues are not met by significant cuts in expenditures. With oil prices continuing to fall in recent months, we have downgraded our forecasts. Although we maintain our estimate of Bolivia's deficit at 4.4% of GDP in 2015, we now forecast a deficit of 7.2% in 2016, from 5.0% previously.
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