Crisis can present opportunities

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Speaking at the VIII International Congress Bolivia Gas & Energy 2015, Raul Kieffer, Secretary of the Bolivian Member Committee, said: “We started the Congress with the question of whether the next decade would be a period of crisis or opportunity. At the end of the Congress we concluded that we are facing a great opportunity that should not be missed. It is in our hands to face these challenges.”

The Bolivian Committee which organised the Congress was attended by the Vice President and Minister of Energy for Bolivia and over 600 delegates. It took place at a time when the world of energy is experiencing a turning point due to the volatility of international oil prices. The drop in oil prices has created problems for new oil and gas projects which can be seen as a crisis, but the Congress concluded that it also opens up important opportunities for improving the energy sector through the use of new technologies and more efficient processes.

It is against this background that the main challenge to build an energy sector which will support future development was discussed. The conclusions of the Congress were that there are five fundamental considerations to take into account when considering the future:

Prices will not rise in the short and medium term due to the current over supply and a continuous increase in production of major players.
The energy sector must meet growing energy demands which need investment over the next decade. Just taking Latin America as an example, an investment in excess of 71billion dollars is required.
The geopolitical context has changed in recent times marked by the weakening role of OPEC. Now, thanks to technological innovation and the development of fracking for shale gas and shale oil, the US has become a lead player and decreased its dependence on outside suppliers. Whilst Russia, with its expansion of pipelines serving the Asian market, has consolidated its role as a major gas supplier.
Australia and a number of countries have identified Liquefied Natural Gas as a strong global competitor for natural gas. There is currently an oversupply of LNG in the global market – companies and countries need to address this issue.
On a global scale, investors welcome well-structured and stable tax laws.

It is a changing environment which presents enormous challenges for Bolivia that need to be addressed in the short term with economic policies and management decisions that will enable Bolivia to ‘blaze’ an energy trail towards 2025. It is a challenge that will require joint investment from the public and private sectors of 30billion dollars.

The good news is that on the immediate horizon, there is the Argentine North-Eastern Gas Pipeline (GNEA) which represents an opportunity not only for Bolivia, but also for other northern neighbouring countries.

Additionally neighbouring countries such as Peru, Paraguay, Ecuador and Uruguay provide petrochemical opportunities for Bolivia. Also, the extension of the contract for the sale of gas to Brazil, search and realisation of new markets and industrialisation of natural gas, in addition to the export of electricity, are new opportunities for Bolivia which could enable it to become the energy hub for the region.

Just one example of the growth of the energy sector in Bolivia is the deal that Bolivia struck with Peru – the latest in a string of energy deals it has done with Peru where Bolivia is selling electricity to its neighbour.

Keiffer said: “When the Bolivia Encare intensive exploration process that guarantees the replacement of hydrocarbon reserves is completed, all the progress that Bolivia is currently making will be consolidated. It will send a clear signal to foreign markets that Bolivia is a reliable supplier of natural gas and an important player in the provision of electricity to neighbouring countries. However, to take advantage of all of these opportunities there needs to be a stable and long term legal framework that will provide the impetus for attracting investment risk into the country. Crisis can provide opportunities.”