Bolivian gas was once the beating heart of South America’s natural gas production, with powerhouse neighbors Argentina and Brazil relying on the landlocked country’s pipeline shipments to keep the lights on. But this is seen coming to an end.
Bolivian gas production will decline more rapidly than expected, falling from 1.4 Bcf/d in 2022 to as low as 400 MMcf/d by 2030, according to a report from Wood Mackenzie.
“Production in Bolivia has been in a steady decline since 2015, with a slight increase in 2021,” said Amanda Bandeira, Wood Mackenzie Latin America Upstream analyst. "However, with few new discoveries and little supply left in mature fields, production will begin to decline at a much more rapid pace. Currently, domestic demand consumes about 30% of the total supply. By 2030, domestic demand will likely outstrip this supply and we may see Bolivia become an importer."
A push for exploration and new discoveries in Bolivia will be required to reverse the natural gas production trend, but recent attempts have been unsuccessful, according to the firm.
Latin America Upstream analyst Kuy Hun Koh Yoo said that in 2021 “the Bolivian government released an exploration plan, yet only three of the 20 wells announced were drilled and they have been dry. In addition, Bolivia’s fiscal terms are among the least competitive in the Latin America region. These have done little to attract capital from outside the country for more exploration contracts.”
The analysts see the projected decline having “a dramatic effect on the export market.” Natural gas is a crucial sector for Bolivia’s economy, with exports to neighboring Brazil and Argentina currently representing more than 70% of total gas sales and 20% of total exports.
But Argentina and Brazil have already begun contemplating a world without Bolivian gas.
“Bolivia is not a hub for supply in the Southern Cone anymore,” said Gas Energy Latin America’s Alvaro Rios, managing director, on an episode of NGI’s Hub and Flow podcast. That role “has to be taken by Argentina,” he explained, citing the country’s immense unconventional reserves.
A new pipeline system called Nestór Kirchner in Argentina could also push gas from its rich Vaca Muerta shale deposit into the northern regions served by Bolivia.
Argentine government officials think the pipeline’s $1.5 billion first phase, which is set to have a capacity of 24 million cubic meters/day (MMm3/d), or about 847 MMcf/d, should be online by June. It will stretch from the town of Tratayén in Neuquén province to Salliqueló in Buenos Aires province, and increase total Vaca Muerta takeaway capacity by 30%.
The second phase of the project would include upgrades to the Gasoducto Norte pipeline system, including flow reversal works and compression stations in the north of the country. Once complete, it would enable Argentina to reduce or stop imports from Bolivia.
Meanwhile, Brazil has developed a series of LNG import options that could help phase out pipeline imports. As it stands, Brazil’s natural gas needs jump from time to time when hydro reservoirs are low. Brazil sources the majority of its power from hydroelectricity.
Brazil also is working to develop its vast pre-salt oil and natural gas reserves. Domestic production accounted for 61% of Brazil’s gas supply as of the second quarter of 2022, according to state hydrocarbons firm Petrobras. Pipeline imports from Bolivia and liquefied natural gas imports accounted for 27% and 12%, respectively.
“Argentina has expanded its production, reducing the importance of Bolivian gas, but Brazil still requires plenty of imports,” said Henrique Anjos, Latin America Gas and Power analyst for Wood Mackenzie. “If Bolivia fails to develop additional production, exports will be halted by 2030 as internal demand outpaces production.”
