Bolivia's Hydrocarbon Output Continues to Decline

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Since 2014, Bolivia has experienced a steep decline in its oil and gas output. According to the International Monetary Fund, "Declines in the output of natural gas may be sharper than anticipated, particularly if current exploration efforts fail to yield profitable deposits."

In 2014, Bolivia produced 51,000 barrels per day (BBL/d) of oil, the strongest output on record going back to 1990. Natural gas production that same year was 60.7 million cubic meters per day, also a record for the country.

In contrast, Bolivia's oil production between January and October 2022 stood at 28,250 BBL/d, or 45% lower than the yearly average seen in 2014. Additionally, natural gas production in the same period reached 42.5 million cubic meters per day, or 30% below the flows seen in 2014.

The steady decline in Bolivia's hydrocarbon production impacts neighboring markets that rely on the nation's natural gas. Brazil and Argentina, for example, are key importers of Bolivian natural gas, especially during the winter months.

Lower output from Bolivia risks supply in neighboring markets and opens the opportunity for supply substitution.

Argentina has been betting heavily on developing its own shale gas industry by exploiting the Vaca Muerta reservoir, one of the largest non-conventional hydrocarbon formations, which has helped to increase production. Moreover, the country also has invested in midstream infrastructure to transport Vaca Muerta's production and supply the internal market.

As a result, Bolivia's importance in the energy market could wane.

Brazil also is a key importer of Bolivian natural gas. Bolivian President Luis Arce recently said that he was ready to discuss with Brazilian President Luis Inacio Lula da Silva "the revision of gas contracts," highlighting interests between the parties.

Meanwhile, as hydrocarbon production has declined, Bolivia has been focusing on lithium mining as an export alternative. This week, Arce highlighted that the state-owned Yacimientos Litio Bolivianos closed 2022 with the sale of 555 million Bolivians (US$80 million) worth of lithium carbonate and potassium chloride.

Yacimientos Litio Bolivianos produced 600 metric tons of lithium carbonate last year, which were exported to China, Russia, and the United Arab Emirates, and it exported 55,000 metric tons of potassium chloride to Brazil, Chile, Peru, Malaysia and Paraguay.

Bolivia has one of the largest lithium reserves in the world, though its industry is less developed than others in the market. Bolivian leaders have vowed to exploit the commodity, which is used in batteries, though it remains to be seen if the industry is able to scale up over the short term.

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