The gas crisis fuels the political battle in Bolivia

bolivian used to be a gas power in South America and came to occupy the eighth place among the world exporters of energy, but the president Luis Arce set off the alarm by revealing that the reserves “They have hit rock bottom.”

For more than a decade, gas was Bolivia’s greatest wealth: it helped lift hundreds of thousands out of poverty, financed highways and forged a middle class, but the lack of investment in exploration meant that reserves were depleting and experts wonder how many more years there will be cheap gas.

The president’s statements unleashed harsh criticism of the government party, in power since 2006, and deepened disputes within the ruling party itself.

“They destroyed the greatest source of wealth that Bolivia had with a false nationalization and an inadequate law. They scared away investment, squandered income on… corruption and today they tell us that we have hit rock bottom. The damage that Arce and (Evo) Morales have done cannot go unpunished.” said the former president and leader of the centrist opposition Carlos Mesa on the social network X, formerly called Twitter.

In his defense, former President Morales (2006-2019) said that before he nationalized gas in 2006, oil income was only US$ 3,000 million. “Thanks to the nationalization, Bolivia received US$38 billion between 2006 and 2019. This is how we reduced poverty. Neoliberals have no morals to criticize”.

But according to Arce, the plans of his political mentor did not work out and his exploratory projects will only bear fruit in 2026, despite the fact that state investment has been less than announced, according to experts.

“Bolivia discovered important reserves 25 years ago and produced up to 62 million cubic meters per day (in 2014) but no investment was made to replenish the reserves. Nationalization raised taxes on oil companies. The state company has no money to invest and international capital does not find the Bolivian market attractive with the current rules”, said the expert and former Minister of Hydrocarbons, Álvaro Ríos.

Current production is around 36 million cubic meters that supply Brazil, Argentina and domestic consumption. The contract with the Brazilian Petrobras expired in 2019 and now sales are made to private clients in smaller volumes. Argentina has already announced that it will do without Bolivian gas in 2024 when its Vaca Muerta field begins operations.

Under the influence of neoliberal governments, Bolivia privatized the oil industry in the 1990s and attracted big oil companies such as Repsol and Total, among others. There was no confiscation of assets with the nationalization decreed by Morales in 2006, but the oil companies focused on accelerating extraction.

Most of the gas comes from fields discovered before 2005.

Bolivia also does not produce enough gasoline and diesel and must import at international prices to sell at half the cost to the local market. The subsidy —which reached US$2.120 million last year— is bleeding the country’s economy dry, said the manager of the Bolivian Institute of Foreign Trade, Gary Rodríguez.

Bolivia has had one of the cheapest gasolines for 16 years —53 cents per liter— and nobody on the streets wants to hear about eliminating the subsidy. In 2010 Morales decreed a sharp increase in gasoline and had to reverse the measure four days later in the face of massive protests calling for his resignation.

Source: AP