At a Glance: Bolivia’s two-front battle to save natural gas exports

The international oil price crash associated with the global downturn brought on by COVID-19 has dimmed natural gas export prospects for Bolivia, which had already been experiencing reduced offtake from Brazil and Argentina.

Energy consultant Mauricio Medinaceli said the Andean nation could see the value of gas exports drop by US$851mn or around 2% of GDP, according to a blog post from the former Bolivian hydrocarbons minister.

Medinaceli bases his forecast on Bolivia’s 2020 budget with a WTI price of US$59/b which would lead to a gas export value of US$2.69bn. He compares this with the US$38/b projected by the US Energy Information Administration, which reduces that value to US$1.84bn.

Source: Mauricio Medinaceli

Among the analyst’s assumptions are that the price of export to Brazil and Argentina will not vary significantly, and that combined volume to these two markets averages 40Mm3/d (million cubic meters a day).

Fellow market observer Francesco Zaratti expects gas export revenue to fall 30%, but points to the possible need of greater requirements by Argentina and Brazil due to the high cost of extraction in those nations.

“However, it is also possible that Argentina will go into default due to the financial difficulties facing its government and it would not suit Bolivia to extract more gas to sell it at very low prices,” according to Zaratti, who has advised the Bolivian government on energy and hydrocarbons issues.

The latest metrics from Bolivia’s hydrocarbons ministry reveal that the average gas export price in January-November 2019 to Brazil (GSA) and Argentina (Enarsa) was US$5.55/MMBTU and US$6.72/MMBTU, respectively.

While the following table shows the gas export price for the first quarter of 2020, which includes QDCB (Base Contractual Daily Amount) and QDCA (Additional Contractual Daily Amount) pricing.

Source: Bolivia's hydrocarbons ministry

TRADE SNAPSHOT

Earlier this month, Bolivia’s state hydrocarbons company YPFB and energy giant Petrobras agreed to reduce gas sales to 20Mm3/d from 30Mm3/d due to increased supply from Brazil’s pre-salt areas.

Brazil’s federal energy planning firm EPE sees its country’s gas production doubling thanks to the growth of output in the pre-salt region.

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In Argentina, state oil and gas company YPF recently said it was curbing gas development on account of Vaca Muerta oversupply and lower demand as a result of the economic recession, now compounded by the coronavirus pandemic.

Information from Argentina’s gas regulator Enargas shows that Bolivian imports averaged 11.7Mm3/d in January-February compared with 12.9Mm3/d and 19Mm3/d in the same periods of 2019 and 2018, respectively.