Bolivia: Investments in Oil Sector Reduced Dramatically

From Petroleum World

How can Bolivian and foreign leftists so callously ignore the consequences of their actions??? This is outrageous!!!!!

For the first semester of 2005, investment in the oil and gas industry only amounted to 65 million dollars in exploration and extraction, according to the head of the Bolivian Hydrocarbons Chamber of Commerce, Carlos Alberto López. This is only 10 percentof what was invested in the same period in 1998, when investments in the sector were $608 million dollars.

There is nothing natural or expected about such a precipitous drop, given the size of Bolivia's natural gas reserves, and relative lack of infraestructure. There were different projects from different companies that were set to start during the last three or four years, that never got off the ground. As the article states, when the Liquid Natural Gas project was proposed in 2001, Repsol-YPF estimated it was going to invest around 2 billion dollars in Bolivia to develop the plan. Petrobras had also made noise about building a second pipeline, and other improvements to increase production, which is still running under the levels envisioned in the contracts.

And now, we are stuck with just 65 millionJust as a point of comparison, Repsol-YPF alone, is investing 325 million dollars in one project in Peru, which has less proven reserves than Bolivia. That is about 5 times the amount ALL foreign oil companies invested in Bolivia - with the areas second largest reserves- from January to June.

This was lost through the collective idiocy that forced out two presidents, starting with the ouster of Goni which also meant the end of dreams of exporting LNG to California. And with this instability and the loony left's calls for nationalization it is no wonder that companies don't want to invest.

This is going on three years that the industry has been neglected. As I wrote earlier, proved reserves were down - as a result of lessened investment. There is a huge opportunity cost here, as potential customers are lost to competitors, established buyers are looking to other countries, and partners are looking elsewhere to invest their money. The lost direct foreign investment alone could be well over 3 billion dollars, without even taking into account any expectation damages due to lower sales volumes than predicted.
These losses can not be calculated by dollars alone, since most of this money was going to build up the infrastructure needed to modernize the industry. And this is Bolivian infraestructure, since the physical structures and production equipment are held by Companies half-owned by the Bolivian Pension System. Now, we might even be looking at a situation where needed improvements and routine maintenance end up neglected. Long term it sets the country back, possibly half a decade in terms of getting a viable industry off the ground.

And then again, for some of the lefties its all about power, screw the consequences. The whiny, indignant lefties in NGO's, can always leave the country feeling good about themselves, secure in the knowledge that they helped the 'cause', by pimping their outdated ideologies to their eager Bolivian pupils. No worry if the country loses money, and the very people they profess to help end up losing out in the end. Who cares about such things as investments and numbers so long as you are doing the right thing!!!!