Production drops and fuel demand rises in Bolivia; a country traditionally known as a hydrocarbons producer. The war between Russia and Ukraine and the recovery of commercial activities after a long pandemic period, set a new international context.

ISSUE 107 | 2022

Elizabeth Riva Álvarez

TThe alarm is turned on again by the hydrocarbon crisis in the country, with long lines of trucks at gas stations. A problem in the diesel dispatch plant in Peru showed the fragility of Bolivia to comply with the supply of this hydrocarbon to the population.

The low production and the growing demand for fuel force the Government to increase the imports of gasoline and diesel with not very promising figures for the national economy.

In 2021, Bolivia imported fuels for about US$ 2,120 million, this year the figure was projected to be similar, but everything indicates that it could be exceeded.

Information from the National Institute of Statistics (INE) processed by the Bolivian Institute of Foreign Trade (IBCE) shows that in 2021 Bolivia imported US$1,500 million in diesel (70.7%) and US$620 million in gasoline (29.2%), amounts that represent 22.1% of the country´s total international purchases.

The $2,120 million destined for imports have a negative impact on the national economy because they almost reach the $2,233 million that the country received from the natural gas sales in 2021. This has an effect on indicators such as the reduction of Net International Reserves (NIR).

EFFECT ON THE ECONOMY

The lack of diesel, which particularly harms the heavy transport that moves Bolivian exports and the agro-industrial sector that requires diesel to keep its machinery running, causes economic damage to the country.

Through the country’s border of Tambo Quemado and Pisiga, between Bolivia and Chile, 450 and 200 trucks circulate each day, respectively; while, through Desaguadero, border with Peru, between 250 and 300 trucks circulate every day, according to the president of the Bolivian Chamber of National and International Transport, Alfredo Borja.

The shortage of diesel, at the end of May, initially affected the departments of Oruro and Potosí and spread to Cochabamba, La Paz, Santa Cruz, Sucre and Tarija, over two weeks.

The Bolivian national Oil & Gas company (YPFB) said that the lack of diesel is “temporary” due to problems external to the state owned company. The company´s officials explained that the problem originated as a result of a delay in the delivery of fuel, due to blockades in Peru and the non-compliance of shipments by the company Petroperú, in addition to the maintenance of the Bolivian terminal in Arica-Chile.

To restore supply and restore peace of mind to the population that began to speculate even with a possible increase in fuel prices, YPFB purchased 2.5 million liters of diesel that were imported to the country in 75 tankers from Arica, Chile via Tambo Quemado, in Bolivia. However, that solution is also temporary.

YPFB supplies the domestic market on a daily basis with more than 6 million liters of diesel that arrive via Paraguay, Argentina, Brazil, Chile and also Peru, fuel that is transported to different regions of the country such as the eastern region, the valleys, the Amazon and the west of the country, according to the executive president of the state owned Oil & Gas company, Armin Dorgathen.

“We are importing around six thousand cubic meters per day (equivalent to 6 million liters), that is the volume that we are importing to guarantee normal operations in the country. We make or best to ensure a continuous supply to the domestic market at the right price and quality,” said the executive of YPFB.

DECLINE IN PRODUCTION

In addition to the growing demand for fuels, as part of the economy reactivation after the Coronavirus pandemic, there is also evidence of a systematic reduction in the national production of crude oil, natural gas and liquefied petroleum gas (LPG), since 2015, according to data from the Vice Ministry of Exploration and Production of Hydrocarbons.

“YPFB supplies the domestic market on a daily basis with more than 6 million liters of diesel that arrive via Paraguay, Argentina, Brazil, Chile and also Peru…”

According to a study carried out by the newspaper La Razón regarding to oil production, it is observed that in March 2015 an accumulated production of 1.9 million barrels was reached, while in January of this year it fell to 1.2 million.

This situation is repeated in terms of natural gas, which in March 2015 achieved an accumulated production per month of 1,874 million cubic meters (MMm3), and in January of the current administration it was reduced to 1,338 MMm3.

Regarding to liquefied petroleum gas (LPG), the highest accumulated production per month occurred in August 2015, reaching 12,371 metric tons (MT), but it fell to 4,450 MT in the first month of 2022.

“We have a decline that has been going on for more than five years. Between 2015 and 2016, the production of natural gas began to decline, which is correlated to liquids production,” admitted Dorgathen, adding that the way to reverse this current trend, is by finding new reservoirs, but, through an efficient development, in which case the results of an increased production would only be seen from 2025.

NEW CONTEXT

The diesel shortage and the low production of fuels occur in the midst of the rise in the international price of oil as a result of the war unleashed between Russia and Ukraine, which has triggered the price of a barrel above 100 dollars and, in addition, has hampered the regular supply.

Also the recovery of commercial, industrial and agricultural activities as well as tourism after a long pandemic, has increased the demand for fuels both in Bolivia and worldwide.

“The US$2,120 million destined for imports have a negative impact on the national economy…”