Gas, the engine that has driven the economy since nationalisation, has lost steam due to lack of investment in exploration.
By 2022, exports have declined by just 50% compared to 2013, when they peaked. The country used its dollar reserves to maintain a subsidy on imported fuel at international prices.
read more: Peru and Bolivia: 10 points of the smuggling route
In mid-June, the government of Luis Arce ordered soldiers to be sent to service stations to prevent internal smuggling or smuggling to Peru and Argentina.
Given the drop in gas revenues, the country – rocked by a failed military coup condemned by the government last week – had to pay foreign currency into the financial system. The Bolivian state had US$15,122 million in cash a decade ago; However, this number fell to 1,796 million last month.
The dollar deficit is high due to government subsidies to companies that import diesel and petrol.
Energy and hydrocarbon analyst Alvaro Ríos points out that, based on the natural gas resources discovered in Bolivia, verbalism and populism were chosen. “All we have done in 25 years is replenish reserves without new exploration. Therefore, the country is moving very quickly from being a purely energy exporting country with high taxes and subsidies, a transition that has caused Bolivia to start importing and needing a lot of dollars, making dollars scarce.
“Bolivia took three wrong paths that I would advise Peru never to take: raise taxes too much when resources are discovered; become statist and nationalistic and believe that the state oil company can do all the work, including exploration; third, there should be no long-term subsidies. under control.
According to Ríos, the subsidies are leading Bolivia to its worst energy economic crisis.
read more: The Renewable Energy Union has warned of an energy crisis from 2025 if the matrix is not changed.
Affected in Peru
Former Energy and Mines Minister Carlos Herrera Descalzi told Guestion that the problem with the deficit is the economic instability it causes. “When it comes to oil and exported countries at a point, and then when they start importing, the economic difference is small, because the cost of transporting oil is low (…) but, in the case of gas, the price difference can be marked. “This is going to affect Bolivia. , that affected Chile and affects all countries that have to import.”.
Along these lines, he warned, there could be problems with gases in the future – with the proven reserves we have. “Scenarios have been reviewed where we see ourselves in a paradoxical situation where we have to import gas and in four or five years – cover future demand, on the other hand, we export”.
Options for Puno and Bolivia
Given the crisis Bolivia is experiencing, Peruvians in Puno can no longer get cheap fuel. “It will be very expensive for them. And because there is a market, those who need it will have to pay the price,” he said. Herrera refers to Descalci.
Regarding the possibility of exporting fuel to neighboring Peru, he noted that he did not see it as a possibility, as it would have to be transported by land to reach Bolivia. “It’s too expensive”.
A former Peruvian energy minister notes that Bolivia is reaping the benefits of years of mistakes. “There are always complaints about fuel prices in Peru, but they are always dealt with real prices; Bolivia, which appeared to be a country with high reserves compared to Peru, is now in a very difficult situation”.
Herrera Descalci says the only way to transport gas to them would be LPG, but they would have to have a regasification plant. “For small demand, it can be handled by tanks, but at their scale it is not possible”. One solution is that they have to import from Argentina as they develop the Vaca Muerta field, which will have gas in the coming years. “This gas should meet Argentina’s needs and be allowed to export.”.
Finally, Alvaro Ríos commented that Bolivia already imports LPG and almost 85% of diesel and 50% of gasoline. Natural gas will be imported by 2029..
read more: The Economist: Bolivia is in trouble beyond failed coup
:quality(75)/s3.amazonaws.com/arc-authors/elcomercio/d7dd75bf-cad5-4b80-bf44-b4db84941f7a.jpg)
Start standing out in the business world by getting the day’s exclusive news delivered to your inbox Here. If you don’t have an account yet, Sign up for free And be a part of our community.
