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The government has announced eleven hydrocarbon exploration projects in Bolivia in 2023

by | Oct 15, 2023

  • The expansion of activity to search for oil and gas points towards the Amazon, where some new projects have been scheduled.
  • The government has also identified more than 100 areas for hydrocarbon exploration in Bolivia, many overlapping with protected areas and indigenous territories.
  • The search for new hydrocarbon areas is carried out amid the drop in gas production and an economic crisis that keeps the country uncertain.

New hydrocarbon exploration projects were announced in April

The government has proposed intensifying hydrocarbon exploration projects in Bolivia during 2023 and has allocated 324 million dollars to this end. The Minister of Hydrocarbons and Energy, Franklin Molina Ortiz, made the announcement during the 2023 Initial Public Accountability Hearing at the end of April.

It was a long six-hour day in which Minister Molina presented 18 hydrocarbon exploration projects in Bolivia and exploitation projects, 11 of which have been scheduled to be executed in 2023 by the national company Yacimientos Petrolófilos Fiscales Bolivianos (YPFB). During the presentation, the minister also said it was necessary to modify the Bolivian Hydrocarbons Law—in force since October 2005—among other regulatory changes. “We are increasing the quality and activity of the exploration sector,” said Molina.

The expansion in the search for hydrocarbons—gas and oil—occurs while Bolivia’s gas reserves continue to decline, and the country has gone from being an exporter to an importer.

“In Bolivia, we have a double dependence on hydrocarbons. On the one hand, there is an energy dependence, and on the other, a fiscal dependence. Approximately 81% of the energy the country consumes is from fossil sources. And from a fiscal point of view, something similar happens. Since the Hydrocarbons Law was enacted in 2005, about 35% of the government’s tax revenues come from exploiting this resource,” explained Raúl Velásquez, an analyst.

The wells in the Amazon

Velásquez points out that in Bolivia, there is “desperation to find hydrocarbons,” as natural gas production has fallen by 37%, which has led the government to renegotiate export contracts with Argentina for lower volumes. “This has had a fiscal impact because it has caused the State to receive less income.” To this, it must be added that Bolivia’s contract with Brazil ended in 2019.

During this reduction in gas exports, the government has decided to expand hydrocarbon exploration projects in Bolivia. The 11 exploratory projects that will be carried out this year, as announced by the government in April, are located in the departments of La Paz, Tarija, Santa Cruz, and Chuquisaca. Three of them — Mayaya Centro X1, Yope X1, and Yarará X2 — are in the drilling stage.

“What has been done is to increase the number of wells and areas exclusively for oil before gas was prioritized. The second component is that efforts are now being directed to the Amazon. For example, the Mayaya Centro X1 is part of this new look at the Bolivian Amazon and complements a well that was drilled a couple of years ago, the Gomero X1.” says Jorge Campanini, a researcher at the Bolivia Documentation and Information Center ( Cedib ).

In addition to these wells — Campanini continues — two more are scheduled, possibly for next year: the Copoazú X1 well and the Castaño well, located in the middle of the Amazon. “They are giving continuity to something developed a few years ago with seismic explorations and are now complementing these wells. “The view towards the Amazon as a new frontier has caught our attention.”

Campanini adds that a very complicated new panorama is being defined amid multiple crises in the hydrocarbon sector. Since 2015, there has been a significant drop in hydrocarbon reserves and production, also linked to the lack of markets. “The contract with Argentina will end soon, while the contract with Brazil has already concluded,” he adds.

The expert continues that the government is expanding this logic of expansion of extraction in areas such as the Amazon, which has been little explored, as well as other areas, for example, Tariquía. Campanini highlights the conflict in the National Reserve of Flora and Fauna of Tariquía with local communities due to hydrocarbon activity.

Between 2016 and 2017, seismic exploration had already been carried out in the Amazon, as occurred in the Nueva Esperanza well, which generated a strong socio-environmental conflict with the Tacana indigenous people. During the seismic survey, he found a village of indigenous people who live in voluntary isolation.

“The Mayaya Center X1 is located in the transition zone between the Andes and the Amazon, and that entire sector, which corresponds to the geological basin of the Madre de Dios River, is being studied. In some cases, they intersect with indigenous territories and protected natural areas such as Madidi Park,” says Campanini.

In 2015, when the drop in gas production began, the government of then-president Evo Morales approved a decree to allow oil exploration in protected natural areas.

The Government chose to make environmental regulations more flexible to see if, in this way, investments for new hydrocarbon exploration projects in Bolivia could be attracted, which did not happen because seven years have passed since that decree. Despite this, no further reserves have been discovered,” says Raúl Velásquez of the Jubilee Foundation.

“Entering natural parks, adds Velásquez— puts these ecosystems at risk and, in the case of Tariquía, in particular, affects water generation for the capital of the department of Tarija. They are measures focused only on exploration without thinking about the entirety of the hydrocarbon sector. As a hydrocarbon exporting country for the last 20 years, we have become, as of 2022, an importing country. That is to say, what we spend to import fuels is more than what we receive from exporting natural gas. The hydrocarbon policy in Bolivia is oriented towards income, and the sector’s sustainability has been neglected.”

New hydrocarbon exploration projects in Bolivia

The country seeks growth through new hydrocarbon exploration projects in Bolivia. Miguel Vargas, executive director of the Center for Legal Studies and Social Research ( Cejis ), mentioned that in 2007, when the national company Yacimientos Petrolófilos Fiscales Bolivianos (YPFB) assumed ownership of state representation for the development of exploration activities, began a process of approval of supreme decrees that allow the authorization of 106 hydrocarbon reserve areas throughout the country. “We have 106 areas reserved for this activity in favor of YPFB. Of them, 65 affect or overlap 43 indigenous territories in the Amazon, the Oriente, and the Chaco,” says Vargas.

According to the executive director of Cejis, 80% of indigenous territories in the Amazon, the Oriente, and the Chaco will have some presence of hydrocarbon exploration projects in Bolivia. This expansion also affects indigenous peoples in a situation of voluntary isolation and initial contact. “18 areas of these reserves overlap with eight areas where there is a presence of peoples in voluntary isolation and initial contact. This expansion of the hydrocarbon border will surely generate some violation of the territorial and environmental rights of indigenous peoples.”

Vargas also questions that in this advance of the hydrocarbon frontier, “safeguards, minimum standards in environmental matters, or community participation in decision-making for the implementation of the projects” are not being considered. The expert mentions that indigenous people will not only face threats to their territories due to YPFB explorations but are also threatened by other activities such as illegal mining or even drug trafficking. Likewise, he expresses his concern about the possible arrival of oil companies “from countries that do not have clear protection standards in favor of indigenous peoples or the environment. They are very small companies or come from countries with deficient environmental standards, such as China. What could happen due to this ‘boom’ in new hydrocarbon projects in Bolivia is a danger.”

Raúl Velásquez, from the Jubilee Foundation, also commented on the more than 100 areas reserved for hydrocarbon exploration. “About 18 are superimposed on protected natural areas,” he mentions. “Although the country has this double energy and fiscal dependence on hydrocarbons, it must be considered that this does not lead to environmental suicide. The environment and natural parks should not be sacrificed to promote hydrocarbon exploration projects in Bolivia to continue deepening fiscal and energy dependence.”

Since 2007 – Velásquez continues – the MAS (Movement to Socialism) government, with former president Evo Morales, was promulgating different supreme decrees to expand hydrocarbon exploration. Through them, it was reserving more than 100 areas for exploration. This time, hydrocarbon interest goes beyond the four traditionally producing departments and reaches the nine departments of Bolivia.

Four Departments are the focus

Hydrocarbon activities have been focused on four departments: Tarija, Chuquisaca, Santa Cruz, and Cochabamba, known as a traditional area, where it has usually been explored and for which there is more geological information. However, in departments such as La Paz, Beni, and Pando, which are non-traditional areas, the exploratory risk is more significant because there is less geological information. And if we think about the north of La Paz, an exploration area overlaps the Madidi National Park,” added Velásquez.

Regarding these areas, Velásquez also indicates that they do not have extraction facilities. No nearby pipeline system allows production to be transported to a marketing market or a refinery. Therefore, new infrastructure would have to be built to move the raw materials that may be found.

“I think the relationship with the communities will become much more complicated. If we remember Astilleros, there is a conflict of interests and an unfavorable situation for the communities,” says Velásquez of the Jubilee Foundation.

Regarding the current legislation and the government’s announcements to modify the regulations, Velásquez comments that since 2009, a new Hydrocarbons Law has been requested since the current one does not respond to what is established in the new Constitution approved in Bolivia earlier this year. “What the Minister of Hydrocarbons announced a few weeks ago is an Associations Law that would presumably be oriented towards new hydrocarbons exploration projects in Bolivia, where these associations occur. However, this is not enough to solve the structural problem that the sector is going through,” he concludes.

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