March 2019 – @alvaroriosroca – The reality of the natural gas market in the Southern Cone (Brazil, Bolivia, Argentina, Chile and Uruguay, where there is interconnection and interdependence), it appears, is moving from a Sellers Market to a Buyers Market. In simple language: Sellers Market (more demand than supply) the buyer has more to gain. Buyers Market (more supply than demand) the buyer have more to gain.
Reserves and production of natural gas from Bolivia, only the media of the previous decade, were indispensable and insufficient in the energy equation of the Southern Cone. Moreover, large quantities of LNG from various parts of the planet had to be turned to Chile, Argentina and Brazil (even Uruguay was setting up its own project) to meet demand and much higher prices than those traded regionally.
This swap from Buyers Market to Sellers Market is due to two factors: New very recent and competitive offer of unconventional natural gas produced mainly in the prolific shale of Vaca Muerta in the country of tango. Steady increase in natural gas production in the country of samba, mainly Presal (where the gas is associated with oil and therefore could have up to negative cost due to reinjection cost) and only have cost of infrastructure and transportation to the coast and the market.
In mid-2017, future investment analysis that we foreseen in Argentina, Brazil and Bolivia, allowed us to predict that there would be excess supply of natural gas in the Southern Cone, as it has been happening. See:
http://www.telam.com.ar/notas/201708/197388-superavit-gas-cono-sur.html
It is possible to expand and update what we said about the exploration activity in Bolivia in 2017. Let’s recall that production capacity was reduced from 61 MMMCD in 2015 to 53 MMMCD in 2019, making it impossible to simultaneously fulfill the contracts signed with Argentina and Brazil at the level of “Delivery or Pay” and the growing demand of its internal market.
The well-kn own Boyui X2 well in the Caipipendi block, operated by Repsol, is in the exploratory phase. The Huamampampa formation has been detected and reached 8,000 meters deep. That is, there is a thickness of about 300 meters in Huamampampa (very productive sand in Bolivia) where production and productivity tests will be carried out in the coming weeks and whose results can be very promising before mid-2019.
Jaguar X1 well is in exploratory drilling, located in the Huacareta block and operated by Shell. The prospect is interesting and the discovery could be of magnitude and give first results before mid-year of 2019. In exploratory drilling is also the well Caranda Deep CAR-X1005ST in the block Colpa-Caranda operated by Petrobras, a somewhat smaller prospect, and whose results will be seen before the end of the year.
Exploratory drilling recently began on the Ñancahuazu X1 well in the Azero block, operated by Total, a very interesting prospect whose results will be seen before June 2020. YPFB Corporation also drills the exploratory well Sipotindi X1 in the Aguarague Norte Block, the results of which will be before the end of 2019.
The advantage of Bolivia is that its sands have high productivity and in an area with a lot of developed infrastructure (plants and pipelines) and with access to two neighboring markets where it will have to compete with Vaca Muerta gas, with Presal gas and with imported LNG in the coming years, and see export possibilities of LNG overseas, if the findings are of magnitude and stability and fiscal conditions allow it.
* Former Hydrocarbons Minister of Bolivia and Current Managing Partner of Gas Energy Latin America.