Bolivia is one of PJSC Gazprom’s priority regions in South America in terms of acquiring oil and gas assets and exploring potential new markets. Currently Gazprom International operates two representative offices in the country in Santa Cruz and La Paz.
Bolivia ranks third in South America in terms of hydrocarbon production levels. The country produces more than 20 bcm of natural gas per year most of which is then exported to Brazil and Argentina. Bolivia has estimated proven natural gas reserves of 11 tcf (approximately 300 bcm). According to Bolivian government estimates, the actual volume of natural gas reserves found in the country is equivalent to 60 tcf (approximately 2 tcm) as of 2016. The expert opinion of the Bolivian Ministry of Hydrocarbons and Energy (MHE) is that the country’s main natural gas reserves are concentrated in three oil-and-gas-bearing regions (departments): La Paz (over 560 bcm), Tarija (over 500 bcm), and Santa Cruz (over 350 bcm).
Cooperation with Bolivia is based upon on a Memorandum of Understanding signed by PJSC Gazprom and YPFB (Yacimientos Petroliferos Fiscales Bolivianos), Bolivia's state oil and gas company, on 21 February, 2007. The Memorandum covers such aspects of cooperation as production, transportation, and processing of natural gas, as well as scientific and technical collaboration.
The Ipati and Aquio Projects
Gazprom, represented by Gazprom International, its subsidiary for upstream projects outside the Russian Federation, and Total E&P Bolivie, a subsidiary of Total, the French oil and gas company, reached an agreement in May, 2008 to include the Russian side in a joint project aimed at exploring and developing the Ipati and Aquio hydrocarbon reserves.
On 30 September 2010, an Agreement was signed pursuant to which Total would transfer 20% of its share in the project to Gazprom International. Following the approval of the share transfer into the Ipati and Aquio areas project by Tecpetrol and YPFB (approval was granted on the same day, 30 September, 2010), two corresponding quadripartite share-transfer agreements were signed on 31 August, 2012. These agreements came into force in 2014 following the ratification procedure required by Bolivian legislation. Today the shares in the consortium which operates the Ipati and Aquio exploration and development project are allocated as follows: 50% held by Total E&P Bolivie (the operating company); 20% held by Gazprom International; and 20% held by Tecpetrol de Bolivia S.A (an affiliate of the Argentine oil and gas company Tecpetrol) and 10% held by YPFB Chaco (100% subsidiary of YPFB).
The project currently under implementation in the Ipati and Aquio license areas located in the Santa Cruz and Chuquisaca Departments, is a joint venture as follows: 50% Total E&P Bolivie (the operating company), 20% Gazprom International, 20% Tecpetrol de Bolivia S.A. (an affiliate of the Argentine oil and gas company Tecpetrol), and 10% YPFB Chaco (100% subsidiary of YPFB). The corresponding operator contracts have been signed and are valid until 2038 for the Ipati license area, and 2042 for the Aquio license area.
The Ipati (237,5 km²) and Aquio (254 km²) license areas are located in the southern part of Bolivia, 40 km to the north-west of the Camiri settlement and approximately 290 km to the south of Santa Cruz de la Sierra. The main exploratory sites are the Huamampampa and the Santa Rosa formations. At the beginning of 2016 the operator estimated the Ipati and Aquio blocks’ reserves to be equivalent to 70.8 bcm of natural gas and 4.8 mln tons of gas condensate.
Total E&P Bolivie discovered the Incahuasi natural gas deposit (Incahuasi-Aquio) in 2004. Three wells were drilled: Incahuasi-X1, Aquio-X1001 and Incahuasi-2. The subsequent tests and surveys allowed the Incahuasi deposit to be declared commercially viable. YPFB later approved a joint plan for the first phase of the project to develop the fields in question. Upon completion of the project’s first phase, it is estimated that the deposit will allow daily production to reach the benchmark of 6.5 mcm natural gas (equivalent to an annual production rate of 2.4 bcm of natural gas).
The first phase of this project is expected to reach a capacity of a daily production rate of 6.7 mcm of natural gas and 587 tons of gas condensate. The gas condensate production rate is expected to reach its peak in 2017, after which it is estimated that it will see a gradual decline.
As of September 2016, a field pipeline network has been completed, together with the necessary facilities and a production management system. The Integrated Gas Treatment Plant (IGTP), boasting daily production rate of 6.9 mcm, was launched on 1 August, 2016; and a 100 km export pipeline has been put into operation. This will be linked to the YPFB main pipeline system, used for the transportation and export of the plant's production. Pilot production began at the rate of 50 tboe per day.
Construction has also started on the project’s second phase expected to reach equivalent capacity. This will also include operation of the previously drilled Incahuasi-3 well, and the drilling of up to 3 additional wells. Furthermore, this will lead to doubling of the IGTP’s capacity to a daily production rate of more than 13 mcm of marketable gas.
The Incahuasi-Aquio field is one of the largest gas and condensate deposits to have ever been discovered in Bolivia. Hydrocarbons produced at this deposit will be used both for export to Argentina and Brazil, as well as on the domestic market.
The Azero project
In April, 2008 YPFB and Gazprom signed an Agreement to jointly study and explore the oil-and-gas potential of the Azero block with the purpose of carrying out further geological exploration works and developing the deposits at a later stage.
On 1 August 2013, Gazprom International, Total E&P Bolivie, and YPFB signed a service contract for the Azero block that, inter alia, sets out the articles of association for a joint venture. Should commercially viable accumulations be discovered here, this joint venture would be responsible for the processing and production of hydrocarbons found in the field. Stakes in the future joint venture were allocated in the following way: YPFB – 55%, Gazprom International and Total E&P Bolivie – 22.5% each.
The signed contract came into force in 2014 following the ratification process set out in Bolivian legislation. According to the terms and provisions set out in the contract, the exploration works to be carried out should include at least a magnetotelluric survey of the area and the construction of two exploratory wells. Total E&P Bolivie and Gazprom International are currently overseeing the geological exploration works in the area. At this stage of the project the shares are split 50% - 50%.
Exploratory drilling is expected to start in 2018.
The Azero license area (7,856 km²) is located in the southern part of Bolivia within the central sub-Andean oil and gas basin. Based on the geological and geophysical evidence available to date, the most promising structures here are the Incahuasi Norte and the Illinchupa fields. The target sites are the Huamampampa and Santa Rosa formations.
Development of the Bolivian Gas Master Plan
Within the framework of the Memorandum of Understanding signed in December 2008 by the Ministry of Energy of Russia and the Ministry of Hydrocarbons and Energy of Bolivia, Gazprom International, Gazprom VNIIGAZ and YPFB signed an Agreement in spring, 2009 for the development of The Gas Master Plan of Bolivia until 2030.
This document (The Master Plan) sets out the directions for the development of the fuel and energy sector in the fields of geological exploration, production, and processing of hydrocarbons, their transportation and realization, including by means of joint ventures, as well as in the field of scientific and technical cooperation. This goal was successfully achieved by Russian specialists by the middle of 2010.
In the meantime, due to the Bolivia’s rapid industrial growth and changes to the international economic situation, the partners were faced with the need to review the document. Thus in April, 2015, the requisite memorandum was signed in the city of Tarija by the representatives of Gazprom International, the Ministry of Hydrocarbons and Energy of Bolivia, and YPFB. It was noted that the updated Gas Master Plan of Bolivia until 2030 is intended to increase the efficacy of the participation of Bolivia’s Ministry of Hydrocarbons and Energy and of YPFB in the development of the gas market.
In February 2016, in Tarija, the same city where the previous agreement had been signed, Gazprom International and the Ministry of Hydrocarbons and Energy of Bolivia took the next step. This time, the agreement outlining the updating of The Gas Master Plan was signed for the period until 2040. The process of updating the Bolivian Gas Master Plan is expected to be completed in 2017.
At the same time Alexey Miller, Chairman of PJSC Gazprom’s Management Committee, and Guillermo Achá, President of YPFB, reached an Agreement on Strategic Partnership, envisaging cooperation in the fields of exploration, production and transportation of hydrocarbons in Bolivia, as well as expanding and modernizing the country’s oil-and-gas infrastructure and creating enhanced power generating capacity. Furthermore, the Agreement provides for the joint development of the Bolivian gas fuel market, as well as scientific and technical cooperation. According to the Agreement, the countries also agreed to look into the possibility of participating in joint ventures in other countries.
Cooperation regarding motor fuel
In February 2016, Bolivian Ministry of Hydrocarbons and Energy and Gazprom International signed a Memorandum of Cooperation regarding the use of LNG in Bolivia. It is expected that the subsequent implementation of the project to develop the gas-engine fuel market in Bolivia will lead to at least part of the country’s car fleet and water transport converting to LNG. The first example of such machinery – the KAMAZ truck tractor – was shipped to Bolivia in May 2016 to demonstrate the range of possibilities offered by the use of such machinery. This cleaner and generally more economic fuel will have a positive effect on the environment in the densely populated and rapidly growing industrial regions of the country. It will also contribute greatly to dealing with the issue of gasification of isolated regions, as well as improving the economic situation of Russian and Bolivian joint fuel and energy sector ventures.
Representatives of Gazprom and YPFB are currently in the process of determining a pilot project for the development of the gas-engine fuel sector. The Rio Grande LNG plant production is expected to be used for such projects. The facility became operational in February 2016 and currently boasts a daily production rate of 210 tons of LNG.
At the Saint Petersburg International Economic Forum (SPIEF) in June, 2016 Andrey Fick, Managing Director of Gazprom International, and the Head of YPFB Guillermo Achá signed an Agreement for Research by Gazprom International experts of potential new areas for future development in Bolivia (with Alexey Miller and Luis Alberto Sánchez, the Bolivian Minister for Hydrocarbons and Energy, present). The areas in question include the La Ceiba and Madidi fields. According to the Agreement, should Gazprom find these blocks to be commercially viable and worth further geological exploration and development, Gazprom International will be able to sign operational contracts on a non-competitive basis.
Bolivia is sometimes referred to as America’s Tibet. It is the most mountainous and isolated Latin American country, famous for its ancient traditions and numerous monuments to vanished civilizations of the pre-Columbian era. Its Incan heritage, magnificent Andean landscapes and the spirited local population, over 60% of whom are indigenous peoples of Bolivia and the direct descendants of mysterious ancient civilizations, make this country one of the most unusual and attractive places on the continent.
Bolivia is a state in central South America. It borders Brazil in the north and east, Paraguay in the south-east, Argentina in the south and Chile and Peru in the west. The largest cities in Bolivia are: La Paz (the seat of government), El Alto, Santa Cruz de la Sierra and Cochabamba. The capital of Bolivia is Sucre. Since 2009, Bolivia has had a new official name: the Plurinational State of Bolivia.
Bolivia is a republic. The President is the head of state and government, and is elected for a 5-year term. The country has a bicameral parliament, which is also elected for 5 years.
In 2009, the country adopted a new constitution under which the state now has control over the key sectors of the economy. Gas reserves and other natural resources were pronounced part of the national heritage. The new constitution also revoked the status of Catholicism as the official religion and considerably extended the rights of the indigenous population – Amerindians. In addition to Spanish, official status was also granted to all the languages of the indigenous people.
Bolivia is divided into nine territorial and administrative departments, each of which, in turn, is divided into provinces.
Bolivia's total area is approximately 1.09 million square kilometres. The south-west of the country lies in the eastern part of the Central Andes (Peak Ancohuma, 6,550 m) and the Puna de Atacama Plateau. In the north-east there are alluvial plains, merging into the Amazonian lowlands in the north, with the Pantanal wetlands in the east. The terrain varies from rocky deserts in the south-west of the country to rainforests in the north-east. Forests cover more than 40% of Bolivia and are abundant with valuable species of tree. Low grasslands cover the eastern parts of the country.
The country's highest peak is the now extinct Nevado Sajama volcano (6,542 m). Bolivia is also home to Lake Titicaca, as well as Salar de Uyuni, the world's largest salt flat.
Bolivia's economy is based on ore-mining for exportation. The country is one of the world's leading producers of tin ore (1/2 of the Latin American yield and 2/3 of all Latin American exports), antimony and tungsten. Bolivia also produces zinc, lead, copper, bismuth, silver, gold, oil and natural gas.
GDP per capita is approximately USD 5,000. Agriculture accounts for 11% of GDP (soya, coffee, coca, cotton, maize, sugar cane, rice and potatoes; timber and animal husbandry). Industry accounts for 37% of GDP (tin and oil mining, food manufacturing, tobacco, manual trades and light industry). The service sector constitutes 52% of the country’s GDP.
In 2010, Bolivia signed a contract with neighbouring Peru for a 99-year lease of a small area of coastal territory to build a port. Thus, 127 years after losing its access to sea following the 1883 war with Chile, Bolivia regained a coastal area, even though it has always had access to the Atlantic Ocean via the Paraguay River.
The population of Bolivia is around 10 million (2010) with an annual growth rate of 1.7%. The population is mainly Amerindian (55%) and mixed race (30%). Around 15% of the population are of European descent. Religion: Catholics – 59%, Evangelicals – 15%, Protestants – 11%, and Buddhists –3%.