Bolivia Oil and Gas Report Q3 2009

Abstract

The new Bolivia Oil & Gas Report from BMI forecasts that the country will account for 0.76% of Latin
American regional oil demand by 2013, while providing 0.60% of supply. Latin America regional oil use
of 6.66mn barrels per day (b/d) in 2001 reached an estimated 7.61mn b/d in 2008. It should average
7.57mn b/d in 2009 and then rise to around 8.23mn b/d by 2013. Regional oil production was just under
10.40mn b/d in 2001, and in 2008 averaged an estimated 9.89mn b/d. It is set to rise to 10.58mn b/d by
2013. Oil exports are slipping, because demand growth is exceeding the pace of supply expansion. In
2001, the region was exporting an average 3.73mn b/d. This total had fallen to an estimated 2.28mn b/d in
2008 and is forecast to be 2.35mn b/d in 2013. The principal exporters will be Mexico, Venezuela,
Ecuador and Brazil.
As regards natural gas, the region in 2008 consumed an estimated 191.3bn cubic metres (bcm), with
demand of 254.3bcm targeted for 2013, representing 32.9% growth. Estimated production of 207.4bcm in
2008 should reach 289.9bcm in 2013, and implies 35.7bcm of net exports the end of the period. Bolivia’s
share of gas consumption in 2008 was an estimated 1.36%, while its share of production is put at 7.23%.
By 2013, its share of gas consumption is forecast to be 1.24%, with the country accounting for 7.43% of
supply.
In terms of the OPEC basket of crudes, the average price in Q109 was an estimated US$45.78 per barrel
(bbl), down 13% from the US$52.51/bbl recorded during the previous three months. During the second
quarter, there has been little change to our view of oil market developments. BMI is forecasting an
average OPEC basket price of US$51.30/bbl, with the March gains being retained in April, before further
recovery to a possible US$57.00 is seen by June. For 2009, we are still assuming an average OPEC basket
price of US$52.00/bbl (-45% year-on-year). The BMI full year forecast implies Brent crude at US$53.73,
WTI averaging US$54.90/bbl and Urals at US$52.66 for 2009.
For the whole of 2009, the BMI assumption for gasoline is an average US$56.89/bbl, with the price
peaking at a forecast monthly average of US$64.75 in December 2009. The overall y-o-y fall in 2009
gasoline prices is put at 44.1%. For gasoil in 2009, the BMI forecast is for an average price of
US$69.35/bbl, assuming a monthly high of US$94.48/bbl in December. The full-year outturn represents a
42.8% fall from the 2008 level. The monthly average jet fuel price is forecast to range from US$53.75 in
February to US$96.76/bbl in December, proving an annual level of US$71.78/bbl. This compares with
US$124.95/bbl in 2008.
Bolivian real GDP growth is now forecast by BMI at just 0.8% for 2009, down from 6.0% in 2008. We
are assuming average annual 3.2% growth in 2010-2012, followed by 3.3% in 2013. There is increasing
state control of oil and gas operations, thanks to government policy that supports re-nationalisation. This
means that the burden of development falls heavily on state-owned Yacimientos Petrolíferos Fiscales
Bolivianos (YPFB) and its few remaining international oil company (IOC) partners. We are assuming oil
and gas liquids production of no more than 64,000b/d by 2013, and the country is expected to pump
58,000b/d in 2009. Consumption beyond 2009 is forecast to increase by around 2.0%-3.0% per annum to
2013, implying demand of 63,000b/d by the end of the forecast period.
Between 2008 and 2018, we are forecasting an increase in Bolivian oil production of just 2.82%, with
crude volumes peaking in 2011/2012 at 65,000b/d, before falling steadily to 58,000b/d by the end of the
10-year forecast period. Oil consumption between 2008 and 2018 is set to increase by 26.13%, with
growth slowing to an assumed 2.0% per annum towards the end of the period and the country using
70,000 b/d by 2018. Gas production is expected to rise gradually, from around 15.0bcm in 2008 to a peak
of 21.5bcm in 2013/2014, before slipping back to 19.9bcm by 2018. With demand growth of 48.02%, this
provides export potential falling from a forecast peak of 18.4bcm in 2013 to 16.0bcm by 2018. Details of
BMI’s 10-year forecasts can be found in the appendix to this report.
Bolivia still holds eighth place in BMI’s Upstream Business Environment rating, four points behind
Ecuador but well ahead of Mexico. Its proven gas resources and gas reserves-to-production ratio (RPR)
work in the country’s favour, but are undermined by the state’s renewed control of assets, deteriorating
licensing regime and generally unappealing risk environment. The country is at the foot of the league
table in BMI’s updated Downstream Business Environment rating, reflecting its state-controlled refining
and marketing segment, modest capacity and less competitive environment, offset by a relatively low
level of retail site intensity and the country’s gas self-sufficiency. Ecuador is immediately ahead of
Bolivia in the regional rankings, but a wide gap exists between the two that is unlikely to be bridged by
Bolivia at any point in the near future.