January 2020 – @alvaroriosroca – Fallacy is nothing more than a deception or lie that hides under something, especially when its lack of truth is revealed. That’s what the state dignitaries of former President Morales’ energy sector did. They deceived and lied, not only to their people, but we believe their president.
In the heat of the inheritance received: 1) Gas and liquid reserves, 2) Gas contract with Brazil, 3) Infrastructure developed to Argentina and Brazil, 4) Chronic gas deficit in Argentina, 5) High prices of gas exports, 6) High gas income with royalties and IDH, 7) Many others, the government of former President Morales generated exports and Dantean income close to 37,000 MMUSD. What they did or how they squandered these resources is a matter of analysis for economists.
These resources allowed the hydrocarbon sector to be managed nefariously. It was devised by Carlos Villegas (QEPD), who from his ideological position and lack of knowledge of the industry, brought the country to where we are today. Successive state authorities were unable to correct it, and all that remained was for the people to fantasize about an industry that was collapsing.
In October 2013, we made Mr. Villegas aware that we would have a serious deficit to meet our gas and domestic market contracts by 2017 if we did not invest in exploration.
http://www.radiofides.com/index_old.php/noticia/economia/Experto_en_hidrocarburos_advierte_deficit_de_produccion_gasifera_en_2017. We were whipped very hard for it. Time proved us right and the evidence is the fines and penalties for non-compliance that came from Brazil and Argentina.
Nevertheless, exploration was not strengthened and the authorities limited themselves to falsifying us and making political festivities about discoveries and new non-existent reserves. We discovered “a sea of gas” was the height of the lie. Our reserves and production are declining, but with some new exploration on the way.
The MAS government left a time bomb in the relations and negotiations with Brazil that were concluding this 2019. The new contract or contracts had to be signed at least a year before. It will have to be done in 70 days. Due to the non-compliances with Argentina, they left an addendum with a winter peak that goes from 11 MMMCD to 18 MMMCD (technically deplorable) and that must be negotiated this 2020.
What is worse, with declining reserves, three white elephant projects of supposed industrialization are being initiated, which are another time bomb for YPFB. The urea plant (1,000 MMUSD) is badly located, operating at 30/40% and does not even cover its operating costs even with gas of 0.96 USD/MMBTU (export 5 or 6 USD/MMBTU).
The Gran Chaco plant (700 MMUSD) that operates at a medium capacity of only one module (of two) and also has serious problems to cover costs. They lied to us that there would be a polypropylene plant when there was no gas, no market and no resources. Finally the Mini LNG plant in Rio Grande (220 MMUS) to supposedly provide gas to rural areas throughout Bolivia and which has serious technical and operational problems and they left it abandoned (another load for YPFB. We were misled by industrialization.
They told us that Bolivia would be the energy heart of South America and that we would export LPG, gas, electric energy everywhere. Generation projects were built without demand or market. Today we have almost 2,000 MW of idle capacity. According to our analysis, even the export of 300 MW of electrical energy to Argentina (70 MMUS invested) is uneconomic and not beneficial to the country. We were misled about exports.
And finally, we are sure that we were misled about the health of YPFB (The Force that Transforms Bolivia) and ENDE. They politicized and made their fiefdoms out of both companies. The current authorities of the hydrocarbon and energy sector have the responsibility to make this information transparent.
*Former Minister of Hydrocarbons and current managing partner of Gas Energy Latin America