Gas Remains an Opportunity for Bolivia

The natural gas market in South America has changed from 1999 to 2019. When the 20-year contract between Bolivia and Brazil began in 1999, terms were settled on a take-or-pay basis, and gas prices were based on a price reference methodology, Natural gas prices were calculated according to the price of oil from the Gulf of Mexico. Now, the South American gas market has matured, consumption has increased and there are more suppliers. Argentina and Brazil are developing their own reserves and the LNG market looks promising in the region. As a result, price formation is shifting from benchmarking pricing to Trade Center pricing. Thus, it is going to be a more competitive market, Bolivia now faces a new reality. The good news; Bolivia will be able to charge higher prices, but Argentina and Brazil are diversifying their supply sources, as a result, Bolivia has to look for new markets and develop its domestic consumption.