Friday, December 14, 2007

Gazprom Considers Investment in Bolivian Natural Gas

Financial Times - Gazprom Eyes $2bn Gas Deal in Bolivia

After the nationalization of Bolivia's energy sector last year, the country is now the target of a potential $2 billion natural gas investment from the Russian energy giant Gazprom. Although some foreign companies still operate in Bolivia, the decision to nationalize and the rhetoric from Bolivian leader Evo Morales have made foreign investors hesitant. Bolivia has the second-largest gas reserves in Latin America, behind Venezuela.

Bolivia is not currently producing enough natural gas to meet its commitments to Brazil and Argentina. It is estimated that Bolivia will need $3.2 billion in investment in order to keep pace with their foreign export commitments, increasing production to 75 million cubic meters per day from 39 million cubic meters per day.

The Bolivian government, through its state-owned company YPFB, would prefer to partner with another state-owned entity such as Gazprom. State-owned energy companies have become more important in the past several years, as governments seek to take direct advantage of their natural resources.

The interest from Gazprom comes amidst a new $750 million investment in Bolivia from Brazil's state-run Petrobras company.

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