In 2006 Bolivia and Venezuela executed an agreement for cooperation in the energy sector which led to the incorporation of a mixed economy company between two state-owned oil companies. The new company's purpose was to develop exploration and exploitation activities in Bolivia's hydrocarbon sector.
Law 3058, introduced in 2005, provides for the ownership of hydrocarbons at the wellhead to be brought under state ownership and control. Further decrees have helped to determine the degree of control which Yacimientos Petrolíferos Fiscales Bolivianos, the state-owned oil company, exercises and plans to acquire in the sector.
Following on from the nationalization of the Bolivian hydrocarbons industry, the government has executed an agreement with the Brazilian government increasing the price of gas exported to Cuiaba in Mato Grosso, Brazil. However, the price increase applies to only 4% of the total gas exported by Bolivia to Brazil.
The 120-day period for oil and gas companies engaged in the exploration, exploitation and production of hydrocarbons to cease activities under the joint venture contracts executed under the now-superseded Law 1689/1996 and to comply with the new contractual framework has now ended.
Although Bolivia has the second largest natural gas reserves in Latin America, the country currently sells natural gas to only two countries: Brazil and Argentina. At the same time as taking care of this existing market, the government also needs to consider ways in which it can expand the market to new clients.
Despite hope in the private sector that the government might assume only a certain degree of control over the hydrocarbons industry, new Supreme Decree 28701 on the nationalization of hydrocarbons has awarded the state complete control over the industry. Private companies have 180 days to comply with the decree's requirements or cease operations in Bolivia.
Bolivia is experiencing a transition in its energy policy as a result of ideas proposed by the new government, led by Evo Morales. In the short period since Morales became president he has announced major changes for the energy sector through the Hydrocarbons Ministry.
Including: Issues; Authorities and Institutions.
Executives of leading Bolivian oil companies are facing a claim that seeks to void the joint venture contracts executed with state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos. The contracts authorize oil and gas companies to explore certain areas and to exploit and commercialize the hydrocarbons extracted from those areas.
Congress has finally approved the new Hydrocarbons Law. The law designates certain activities to be of public interest and national use, including operation, transportation and storage and commercialization. However, further legislation is still needed in order to ease the uncertainty faced by the hydrocarbon industry.
The Bolivian Senate has again considered the controversial Hydrocarbon Law, which has divided the country in half and was a key reason behind the president's decision to submit his resignation to Congress. The law proposes excessive non-deductible taxes, and oil companies have threatened legal action if it is passed.
Changes to the Hydrocarbons Law are being considered as a result of structural changes in the country, as well as a series of state and regional demands for autonomy. If adopted, the changes would result in the state-owned hydrocarbons company playing a more active role and participating directly in all industry activities.
Argentine President Nestor Kirchner and Bolivian President Carlos Mesa have agreed to enter into a gas purchase agreement under which Bolivia will sell a certain amount of gas to Argentina. The sale was negotiated under unusual conditions, including a prohibition against the Argentine government reselling the gas to developing countries (Chile in particular).
If the findings of a forthcoming pre-feasibility study are positive, negotiations will be initiated to draw up a contract for the construction of a $3 million gas to liquid production plant. The project is set to reap many benefits for Bolivia.
Bolivia is enjoying a new-found popularity among countries that require natural resources. One of the reasons for this is the recent discovery of several gas reservoirs, the discovery of which was made possible only through investment in the capitalization process of the divisions of state owned petroleum company YPFB.
Plans are afoot for Bolivian gas to be exported to both Mexico and California. However, the project is proving to be controversial: sensitive diplomatic issues have arisen from the need to choose a port by which the gas will reach the Pacific Ocean.
Since its creation in 1997 as part of the Vice-Ministry of Energy and Hydrocarbons, the Environment Unit has liaised with key players in the hydrocarbons industry and conducted studies in order to incorporate international environmental standards for the industry in Bolivia.
GasOriente Boliviano (the owner of the Bolivian section of the Bolivia-Brazil pipeline) has measured carefully the pipeline's environmental impact and specialists are overseeing the reconstruction of the ecosystem that previously existed.
Including: Exploration, Exploitation and Commercialization; Hydrocarbon Transportation and Natural Gas Distribution; Refining and Industrialization; Mandatory Easements.
Agreements have been signed for the Bolivia-Brazil pipeline project. These agreements form the basis for transporting Bolivian gas from the Rio Grande to the Brazilian border. The Bolivian pipeline is operated by Gas Transboliviano SA, an Enron/Shell company.