Consortium to invest $1.3bn in Bolivian gasfields

[Judi Lynn]

Consortium to invest $1.3bn in Bolivian gasfields
By Naomi Mapstone in Lima

Published: December 9 2010 01:27 | Last updated: December 9 2010 01:27

A European-Argentine consortium is to invest $1.3bn over five years in two natural gasfields in the south of Bolivia.

Repsol of Spain, BG Group of the UK and Pan American Energy of Argentina will develop the Margarita and Huacaya fields, boosting output from 2m cubic metres per day to 8m cmd, according to Yacimientos Petroliferos Fiscales (YPFB), Bolivia’s state energy company.

The investment comes amid intense speculation over the size of Bolivia’s proven gas reserves after a report by US consulting firm Ryder Scott reportedly put the country’s reserves at between 8.3 and 9.3 trillion cubic feet, instead of the 12.8 to 26.7 trillion-cubic-foot range used by government.

More:
http://www.ft.com/cms/s/0/fc3e88f2-032d-11e0-80eb-00144feabdc0.html#axzz17Zyvt9sX

[social_critic]

1. I would not worry about it until I look at the fine print

Both sources may be right. Ryder Scott would be using the definition of proven used by the US Securities and Exchange Commission, because their figures will be used by the companies in their filings as well as bond issues.

The Bolivians may be using a more liberal definition. The key difference may be the gas sales contract - Ryder Scott would only count the reserves within the contract period, and within the existing license the private companies have secured. The Bolivians could be using a broader term, and could be ignoring the gas sales contract period as well. Finally, it is well known those fields will recover more gas if they are squeezed harder by drilling more wells, but the foreigners may not be willing to drill the number of wells required because Bolivian terms have been made less attractive as Bolivia follows the Venezuelan's lead.

In Venezuela the industry is seeing a similar effect, the type of terms imposed by the government have reduced production in the old service contract areas as well as the Orinoco heavy oil areas, and it looks like the recovery factor will be lower under the current system. This of course will leave oil in the ground which otherwise can be sold.