Bolivia: from gas to... what?

Abstract

It is unlikely that in the present political and social conditions in Bolivia a real reactivation of its oil industry will materialize any time soon. The lack of competitiveness of Bolivia's fiscal regime and the government's undisguised antagonism towards foreign investment have pushed capital flows to seek other, less volatile, destinations in the region. And the lack of relative competitiveness of the price of Bolivian gas, have pushed Brazil, Argentina and Chile to commit their markets to imported LNG that, even if more costly, avoids any dependence on Bolivia and ensures a reliable, flexible and stable supply that steers clear of the prevailin swings and uncertainties in the country. The massive investments necessary not only to increase the productive capacity required in 2010 but, simply, to sustain current production volumes, and the absence, so far, of any concrete evidence of reactivation in exploration and development activities in the country indicate that Bolivia's oil industry may not yet have faced its most unpleasant and difficult moments.