There is an old propaganda poster advertising Evo Morales’ third-term program: “Bolivia will be the energy heart of South America. Bolivia will have energy sovereignty. We will export energy to neighboring countries and become a regional leader.” The former president began that term in 2015 backed by an overwhelming electoral victory of more than 60%. The support reflected the economic stability the country had enjoyed since his first term in 2006, sustained mainly by natural gas exports, which in 2014 alone reached $6.1 billion. International reserves became the highest in South America relative to GDP. But behind the scenes, the picture was different. Reserve certifications did not match the extravagant figures that had been proclaimed, and oil companies had neglected exploration of new fields.
The consequences followed: exports fell by almost 60% over the last decade, striking the economy with a severe shortage of foreign-currency liquidity. The lack of answers to confront the recession, as demanded by popular sectors, is one reason that protesters have kept La Paz under siege for more than a month. The unrest worsened in February, when the distribution of poor-quality gasoline ruined thousands of vehicles, weeks after the government of Rodrigo Paz had removed fuel subsidies.
It is the authorities themselves who acknowledge that, if new fields are not found, Bolivia will have to begin importing the resource it once prided itself on having in abundance. With an electricity matrix that depends 70% on natural gas, the fear of blackouts has ceased to be a conspiracy theory. The current hydrocarbons minister, Marcelo Blanco, recently presented a bill that seeks to diversify the energy matrix and, in his words, secure supply in the medium term.
As of April this year, Bolivia has 3.7 trillion cubic feet (TCF) of proven reserves; U.S. certifier DeGolyer & MacNaughton assigned it around 28.7 TCF in 2003, up to 52 if probable reserves were included. In 2009 the firm Ryder Scott made a drastic adjustment, lowering them to 9.94 TCF. Mirko Orgaz, a researcher and author of the book Nacionalización, historia y poder del petróleo (Nationalization, history and power of petroleum), describes this “reality check” as the first sign of the gas decline: “We went from being a country rich in gas to merely a producer. The figures were manipulated at the time to revalue the shares of companies that invested heavily during the neoliberal era (1982–2005).”
The belief that Bolivia was swimming in a “sea of gas,” as its heads of state called it, led to overexploitation of existing fields and the abandonment of the search for new deposits. “Even with the new certifications, the government’s policy will continue to be the same, operating under the idea that we have an enormous gas reserve, with exports to Brazil and Argentina,” Orgaz says.
The main concern now, however, is no longer recovering previous sales volumes: state oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) announced in April that the country might be forced to import gas to supply its domestic market starting in 2031. If the country becomes an importer, it will need about $5.5 billion by 2035 to buy fuel—almost one-tenth of GDP, according to projections by former hydrocarbons minister (2003–2004) and director of Gas Energy, Álvaro Ríos.
Ríos assumed the post in a period of transition when fuel management shifted from predominantly private hands, such as Repsol and Petrobras, to the state during the nationalization process that was later consolidated with the rise to power of the Movement Toward Socialism led by Evo Morales. The former coca-growers’ leader was among those who pressured Ríos to draft a new hydrocarbons law to capture greater public revenue. A tax burden of up to 60% was introduced, allowing subsidies for gasoline and diesel both for the vehicle fleet and for thermal power plants that bought cheap gas to generate some of the continent’s lowest electricity tariffs.
“During that period reserves were not replenished, subsidies were maintained [today removed by the Paz government] and money was spent left, right and center [a study revealed that between 2005 and 2017, 66% of the revenue went to operating expenses and only 34% to investment],” Ríos tells EL PAÍS. The lack of exploration of new fields is, for the scholar Orgaz, another factor in the collapse of Bolivia’s energy model.
“A decree in the neoliberal phase, during Jorge Tuto Quiroga’s government (2001–2002), removed the obligation for foreign oil companies to explore. But in the new contracts of the 2006 nationalization they were not required to look for new fields either. As a result, transnationals invested around 69% in production and the remainder in exploration,” Orgaz says.
Upon taking office in November, Paz eliminated the subsidy, a measure seen as necessary due to the lack of reserves to bear that cost. The situation, however, has not improved much since then. The protests, in addition to condemning the distribution of poor-quality gasoline, reject a potential privatization of YPFB, an institution riddled with corruption. Three presidents have passed through the company in six months and a couple more remain fugitives from justice over alleged illicit enrichment.
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