A photo of workers of the state oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) drilling an oil well. CREDIT: YPFB

By Franz Chávez
LA PAZ, Jun 19 2023 (IPS)

One of the largest natural gas reservoirs in South America is showing signs of decline and the hopeful expectations that emerged in 2006, to turn Bolivia into a regional energy leader, are waning.

When the fossil fuel bonanza was already showing signs of fatigue, then president Evo Morales (2006-2019) announced in the middle of his election campaign, in March 2019, the discovery of what was described as a “sea of ​​gas” in the department of Tarija, in the south of the country.

But the certainty of a future natural gas boom gave way to a downward trend in the sector that is currently affecting production and sales and has shattered the hopes that gas would remain the engine of internal development for a long time to come, according to industry experts.

“They strangled the goose that laid the golden eggs,” said Gonzalo Chávez, an analyst with a PhD in economics, who pointed to a 3.2 billion dollar drop in gas revenues between 2014 and 2021. The decline is attributed to the lack of exploration of new reserves.

In 2014, oil and gas revenues amounted to nearly 5.5 billion dollars, compared to less than 2.3 billion dollars in 2021, according to Chávez’s calculations. The fall is considerable, more so given that in 2021, public spending totaled 2.6 billion dollars. The economy grew that year by 6.5 percent, according to the Ministry of Economy and Public Finance.

The state-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) “has shown that it does not now have the technical or financial capacity to explore or develop new fields,” economic analyst Roberto Laserna told IPS.

The company’s website reported that the investment in exploration and exploitation of hydrocarbons for the period 2021-2025 amounts to 1.4 billion dollars, and quotes its president, Armin Dorgathen, as stating that the aim is “to change this situation of the importation of fuels.”

On Jun. 12, the YPFB announced that the testing stage at the Chaco Este X9D oil well, located in the province of Gran Chaco in Tarija, “recorded hydrocarbon flows in two reservoirs,” as part of the effort the company is making to show that it is pulling out of the production rut.

Dorgathen announced that the discoveries will contribute an average production of 8.76 million cubic feet per day of natural gas and 281 barrels per day of crude oil.

Questions that IPS sent to YPFB a few days earlier, regarding the drop in gas revenues, received no response.

In the 21st century Bolivia remains dependent on hydrocarbons, both for its energy consumption – 81 percent of which comes from fossil sources – and for its tax revenue – 35 percent of which comes from the industry since the Hydrocarbons Law was introduced in 2005.

This landlocked Andean country of 12.2 million people has an economy traditionally based on extractive activities, especially tin, lead, zinc, copper, gold and silver mining, and more recently and abundantly on fossil fuels, after the discovery of large gas deposits at the beginning of this century.

One of the first measures adopted by Morales upon taking office in 2006 was the total nationalization of the industry, leaving the entire production and marketing chain in the hands of the YPFB. And thanks to the gas boom, 38 billion dollars in oil and gas revenues were obtained in the period 2006-2018, when the steady decline began.

A photo of the Chaco Este X9D well, exploited by YPFB in the Gran Chaco province of the department of Tarija in southern Bolivia. CREDIT: YPFB

Hasty actions

To try to pull out of the crisis, Minister of Hydrocarbons and Energy Franklin Molina announced on Apr. 28 to Congress 18 new exploration and exploitation projects, 11 of which are to be carried out this year, with an investment of 324 million dollars – a plan considered unrealistic by industry observers.

The 11 projects, where oil appears to take precedence over gas, are located in four of Bolivia’s nine departments: La Paz in the west,Tarija in the southeast, Santa Cruz in the east, and the central Chuquisaca.

“The fact that we do not have gas and we are net fuel importers is the fault of flawed government policies” in the sector, financial analyst Jaime Dunn wrote on his social networks.

According to the expert’s calculation, the fiscal deficit for the year 2022 reached 1.7 billion dollars, largely due to the fuel subsidy, because a 159-liter barrel of oil is bought on the international market for an average of 90 dollars and is sold domestically for 27 dollars.

Long gone are the “sea of ​​gas” dreams that in April 2002 led President Jorge Quiroga (2001-2002) and his Minister of Economic Development Carlos Kempff to announce that after a study of 76 oil fields by a US company, it was estimated that the country’s proven and probable gas reserves totaled 52 trillion cubic feet (TCF).

But only 10.7 TCF of proven natural gas reserves were certified in 2018.

The search for new reserves runs up against a legal framework that protects the environment and indigenous lands, where part of the probable sources of hydrocarbons are located. “The constitution contains many obstacles and restrictions to attract foreign companies with the capacity for exploration,” said Laserna.

The rewritten constitution, approved in February 2009, forces companies interested in exploration and exploitation to obtain authorization from the Plurinational Legislative Assembly, with the threat that any permit will be declared null and void if this requirement is not met.

Foreign companies, according to the constitution, are “subject to the sovereignty of the State,” which rules out arbitration and diplomatic demands as a way of solving conflicts.

A photo of the 15-story building of the headquarters of Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), located in La Paz, where the executive and organizational offices of the government-owned oil company have been operating since 2018. CREDIT: Franz Chavez/IPS

Environment and development

In terms of energy production, the constitution prohibits transnational corporations from exclusively managing concessions.

In addition, it places the environment above interests in economic uses of land and gives the local population the right to participate in environmental management, “to be previously consulted and informed about decisions that could affect the quality of the environment.”

These powers granted to indigenous peoples and local communities are protecting the Tariquía National Flora and Fauna Reserve, in the municipality of Padcaya in the department of Tarija, which covers 246,870 hectares, part of which is close to the border with Argentina.

Since 2017, Lurdes Zutara has been a local organizer fighting the entry of oil companies into the area, warning that since the first roads were opened to give access to exploration equipment and teams, the water from the local source that gives rise to rivers and streams has decreased in flow.

Speaking with IPS from her town in Tariquía, the activist said that some families in the communities accepted the entry of heavy machinery, and noted that municipal authorities belonging to the governing Movement to Socialism (MAS) party were facilitating the preparatory operations for oil exploration.

“The immediate risk is drought because the road affects the water intakes,” Zutara said.

She added that things will never be the same, that the relationship among local inhabitants will change because inequalities will emerge between those who obtain development with the support of the company and others who will be left out.

Bolivia is officially a multinational country located in the center of South America, where 41 percent of the population of 12.2 million consider themselves indigenous, according to the last census.

The United Nations Development Program (UNDP), based on data from the National Statistics Institute (INE), described in its latest report on human development the persistence of significant inequalities by geographic area, ethnicity, gender, and socioeconomic status.

In 2018, 54 percent of the inhabitants of rural areas suffered from moderate poverty and 33.4 percent from extreme poverty, compared to 26 and 7.2 percent, respectively, in urban areas.

Against this backdrop, Chávez the economist lamented that Bolivia went from being a major gas reserve in the South American region “to an importer” of fuels, with the subsequent impact on social development.

Laserna concurred, stating that “the outlook for the country is very discouraging” with respect to gas and the expected socioeconomic boost that was to come from fossil fuels.

Guaraní representative Justino Zambrana, president of the Legislative Assembly of Tarija. Credit: Rafael Sagárnaga López /IPS

By Rafael Sagarnaga Lopez
TARIJA, Bolivia, Dec 27 2012 (IPS)

Due to the intense political polarisation in the Chaco region, home to Bolivia’s oil and natural gas wealth, three indigenous lawmakers who entered the legislative assembly of the southern department of Tarija as representatives of their people have quickly come to wield decisive power.

For centuries, the semi-arid Chaco of Bolivia had a reputation of being inhospitable. Temperatures that often climb as high as 45 degrees and a scarcity of shade-providing trees were combined with its distance from the centres of power. During the colonial era, the Spanish invaders found it almost impossible to settle the vast dry region of open grasslands and shrubby areas.

Between 1933 and 1935, the harsh natural conditions helped defeat first the Bolivians and then the Paraguayans in the war they waged for control over the northern part of the Gran Chaco region, which they also share with Argentina.

As a result, there have always been areas in the now prosperous department of Tarija that have been the exclusive domain of the Guaraní, Weenhayek and Tapiete indigenous people, the area’s ancestral inhabitants. Even with the gradual arrival of paved roads and the development of a number of cities, driven by oil industry activity, the deepest reaches of the Chaco continue to be theirs.
Nevertheless, until 2009, they were excluded from political and institutional structures and received scant or no assistance from the state. They remained distanced by their geographical isolation, their Guaraní dialects, and their conceptions of humanity and government.

But 2009 ushered in a number of the changes for which they had risen up in protest marches on repeated occasions. “It was a historic victory for the Confederation of Indigenous Peoples of Bolivia, the Guaraní People’s Assembly, and popular forces in general,” departmental assembly member Justino Zambrana told IPS.

“We were finally able to elect representatives in accordance with our traditions and customs, under the mandate of the new political constitution of the state of Bolivia,” the Guaraní leader said.

The new constitution adopted that year proclaimed Bolivia to be a plurinational state, and officially recognised 36 ethnolinguistic groups, in a country where over 60 percent of the population of 11 million identify themselves as indigenous.

It also stipulated that the legislative assemblies of the nine departments into which Bolivia is divided must include indigenous representatives elected by the native communities, in accordance with their traditions and customs. In the case of Tarija, the assembly must include three indigenous representatives.

Previously, in January 2006, the country’s first ever indigenous president had taken office: Evo Morales, who is of Aymara descent. In 2011 he was re-elected to a second five-year term.

In Tarija, as well as supporting the demands of their particular ethnic groups, the indigenous representatives were also called upon to assume unexpected responsibilities when departmental governors and legislatures were elected in 2009.

They became members of the Departmental Legislative Assembly of Tarija, the Chaco region department that is now the energy and economic heart of Bolivia, as well as a major source of oil and natural gas for the entire continent. Its massive reserves supply energy to the megalopolis of São Paulo, Brazil, as well as the north of Argentina.

The department’s strategic importance gave rise to a heated political dispute in its capital, Tarija, 896 km south of La Paz.

The tight race between the political parties that back the Morales administration and the opposition resulted in a virtual parity of forces.

This meant that, among the 30 assembly members in Tarija, the votes of Tapiete representative Vicente Ferreira, Weenhayek representative Antonio Tato and Guaraní representative Zambrana became strategic.

“At first they didn’t take us into account, but when they realised that our votes were worth something, they started to seek us out,” Ferreira told IPS. “It was very difficult for me. Sometimes we didn’t know which way to decide, and in the meantime I had to learn about laws and take part in debates with lawyers.”

A series of rapid developments put the trio to the test. On May 27, 2009, the president of the assembly had to be elected. Out of affinity with the platform of Morales’ party, the Movement to Socialism (MAS), they voted for its leader, Aluida Vilte, also of Aymara descent.

This took the small indigenous caucus a step closer to the upper echelons of power in Tarija, and Zambrana was elected vice president of the assembly.

Seven months later, the assembly had to decide on whether or not to impeach Governor Mario Cossío, of the opposition party Camino al Cambio (Road to Change), who had been charged with acts of corruption by the Public Prosecutor’s Office.

The three indigenous votes were decisive in separating Cossío from his post and opened the way for a MAS member, Aymara deputy Lindo Condori, to be designated governor in his place.

“We do not do political favours for anyone. In the case of Cossío, we had to enforce the law, and that’s what we did. That was why we supported his removal,” Zambrana said.

“In indigenous assemblies we take great care to avoid any kind of political interference. When someone needs to be challenged, we challenge anyone, and sometimes this (national) government has played a divisive role and wants indigenous people to dominate other indigenous people,” he added.

“I was taught that one people cannot subjugate another people, that there has to be respect. We are always ‘yambae’ (free, with no owner, in the Guaraní language),” he declared with a smile.

And in fact, in May 2010, at the beginning of the second year of the departmental legislature’s five-year term, Zambrana became its president, but was elected with the votes of the opposition to MAS.

It is said that a committee from the national government came from La Paz to persuade the three indigenous representatives to change their stance. “Why would an indigenous person want to be president of the assembly? D

Do you want to side with the right?” an emissary is reported to have asked, and was met with the reply, “And is the indigenous president Evo Morales governing the country to side with the right?”

A year later, Zambrana was re-elected to the presidency of the legislative assembly. He says he was even approached to run for governor, but turned down the idea.

Analysts in Tarija believe his stance helped to avoid exacerbating the frequent belligerence that characterises the department’s legislature. Accusations and counter-accusations about pressures of various kinds have also affected the decisive indigenous caucus.

At the time of Zambrana’s re-election as president, a group of MAS supporters allegedly cornered Weenhayek representative Tato for three hours, in an attempt to intimidate him.

The notoriously timid legislator avoids speaking with the press. At the end of 2012, he was back in his home community, where he was called on to account for his actions to the “captains” or leaders of the Weenhayek people.

Weenhayek grand captain Moisés Sapirenda referred to the possibility of Tato’s removal as the indigenous ethnic group’s representative. “There are many things he has not reported. Next year we will consider if his mandate should be withdrawn,” Sapirenda told IPS.

The Weenhayek leader is also less than satisfied with the work of the rest of the indigenous caucus in serving the people they represent.

“We are happy with the opening that allowed us to elect our authorities through our own traditions and customs. We were hoping for laws that would benefit our people, but it seems that when it comes to deciding on works that could change our lives, we are a minority once again. We continue to be far away, like always,” he said.

Sapirenda’s warning should not be taken lightly. The Weenhayek have already revoked the mandate of a national assembly member and a regional assembly member in a neighbouring department.

In the meantime, the Tapiete and Guaraní captains are waiting until their next regular assemblies to assess the reports made by Ferreira and Zambrana, who will be expected to render accounts on how they have responded to the challenge of suddenly being thrust into positions of power.