Brazilian imports of natural gas from Bolivia have fallen steadily from a high of 31.5 million cubic meters per day at the end of 2008, to 25 million earlier this month and now to only 21 million cubic meters daily. Hydrocarbon sales, which have dropped almost 20 percent, are widely considered Bolivia’s “engine of growth.” But even amid lowered natural gas exports, Bolivia’s National Statistics Institute reported last week that the economy grew at a rate of 2.1 percent in the first half of 2009.
Among the reasons cited for the decrease in demand are increased domestic gas production in Brazil, the recovery of water levels for hydroelectric dams in southern Brazil and the completion of two liquefied natural gas (LNG) re-gasification plants capable of receiving LNG from global exporters. Historically, when Brazil’s gas purchases have fallen, Bolivia has tended to sell more gas to Argentina. This time, sales to Argentina appear to be holding steady. Brazil is contractually obligated through 2019 to purchase a minimum of 20 million cubic meters daily.
Also notable is an increase in recent months of Bolivian imports of liquefied natural gas despite abundant domestic gas reserves. Analysts indicate that this is likely a consequence of inadequate investment in downstream infrastructure—a result of the hydrocarbon nationalization process began by the administration of President Evo Morales in 2006.