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Carlos Villegas, president of the state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has announced that the country plans to invest US$11 billion in the sector over the next seven years in order to develop its entire oil and gas production chain.

Villegas explained that YPFB needs to invest US$7 billion over this period, and the rest must be supplied by transnational companies operating in the country. The funds will be used to invest in exports, exploration, transport, logistics and oil and gas storage.

This “need” arises from the priority set by the government to cover domestic demand for liquefied petroleum gas, gasoline and diesel, which Bolivia currently does not meet, forcing it to rely on imports from Argentina and Venezuela. Bolivia’s domestic natural gas network is also underdeveloped, which means that the government subsidizes LPG cylinders and diesel with Treasury funds.

However, the announcement was criticized by Bolivian experts. According to Álvaro Ríos, former minister for the industry between 2003 and 2005, YPFB “needs to come to terms with reality,” given that it has already received a US$1 billion loan from the Central Bank of Bolivia. “YPFB does not have the funds that Villegas is talking about, and even if it did, it lacks the business management to administer them,” said Ríos to El Deber.

Meanwhile, oil and gas expert Freddy Zaratti believes it will be difficult to secure these investments while Bolivia gives no guarantees to foreign companies.

Bolivia also announced its intention to review contracts covering gas sales to Brazil and Argentina, reported El Deber. With respect to Brazil, this consists of renegotiating the quantities of gas the country purchases (between 17 and 31 million cubic feet per day). Bolivia is looking to sign a more specific contract with Argentina which provides foreign firms with investment guarantees.

Planning Minister Noel Aguirre urged Villegas to discuss these contractual changes and warned El Deber that modifying the agreements could affect the country’s economic stability, given that the majority of Bolivia’s public funds come from oil and gas sales.