| Bolivia Gas Boom Harkens To Days of Silver Wealth By Ronald J. Morgan TARIJA, Bolivia -- The silver mines of Potosi once provided so much wealth to this South American nation that the saying to be worth a Potosi came to be used to indicate anything of greath value. But soon, Bolivians may be replacing that saying with it's worth a Tarija. Just as fortune onced flowed for more than two centuries from Potosi's "rich mountain" Bolivia's southern department is now sitting atop billons of dollars worth of natural gas. Second in reserves in South America after Venezuela, Bolivia has 47 trillion cubic feet, known in energy parlance as TCF. The gas, all discovered in recent years, has converted Bolivia into a energy exporting nation. And soon, it may be South America's biggest energy supplier. Gas began to flow in 1999 through a $2.1 billion mile pipeline stretching 2,000 miles to energy-short Sao Paulo. Two additional Brazilan pipelines are in the works, and sales are expected to increase four times from 30 million cubic meters (1.06 billion cubic feet) per day to 120 million cubic meters (4.2 billion cubic feet) per day over the next eight years. The reserves are large enough that a consortium of oil companies plans to invest between $5 and $7 billion to bring liquefied gas to California and Mexico's Baja California. The group, which is made up of the Spanish firm RepsolYPF, British Gas, British Petroleum and the Argentine firm Bridas will build a pipeline from Tarija to the Pacific coast, either at the Chilean port of Mejillones or the Peruvian ports of Ilo or Matarani. There a gas liquefication facility will be built and gas shipped north to California. The California-based Sempra Corporation is negotiating a twenty year contract for the fuel. Bolivia's gas reserves are expected to make Bolivia an energy power for about 100 years, predicts Daniel Centeno Sanchez, a geologist who heads the Tarija Office of Hidrocarbons, which oversees gas exploration in the department. "What has happened is a geological phenomenon and also an economic phenonomen," said Centeno,whose book "Tarija Gas and Petroluem" is about to hit the Bolivian bookstores. The Bolivian government reaped an estimated $200 million in gas-related royalties and taxes in 2001. And should be earning from $320 million to $370 million a year by 2006 to 2007, according to a British Petroleum estimate. There will also be benefits from investment flows which are expected to average $200 to $400 million per year in new exploration. Multi-billion dollar natural gas to diesel fuel and petrochemical projects are also on the drawing board. Good news for a country which the World Bank describes as suffering from proverty levels similar to Sub-Saharan Africa. Some 70% of Bolivia's 8.1 million population lives on less than $2 a day. The average schooling completed is less than seven years and 10 percent of the children under five are malnourished. Until recently Bolivia was known mainly as the third largest coca producing country. But a legacy of drugs and shaky governments has gradually been receding. Following a return to democracy in 1985, Bolivia implemented a series of neoliberal economic reforms and since 1997 has conducted a massive U.S.-financed coca leaf erradication program. Bolivian President Jorge Quiroja said in a recent speech before the Organization of American States in Washington that the country wants to be known in the future for its fight to end underdevelopment. Bolstered by $2 billion in foreign debt relief from the International Monetery Fund and World Bank sponsored Highly Indebted Nation initiative Bolivia launched a national poverty reduction program in March, 2001. But the job will be difficult even with the increases in revenue. Privatization, coca erradication and an economic slowdown have left unemployment at 12% and a large portion of the population disposessed and angry. The situation is particularly acute for some 35,000 coca leaf grower families affected by the U.S.-sponsored coca erradication program known as Plan Dignity. Promises of alternative development haven't been kept, they say, and hunger is fueling anger. Jose Trujillo, 58, a former worker in a state-owned mine that migrated to the coca leaf growing region of Chapare during the 1970s is typical. "The coca has been cut down and there's nothing That's why we have to hold vigils and protest. We have to tell the world that the poverty here is being caused by the government and the United States. This is fight for our stomachs," he said while protesting in Chimore. Since September about 20 fellow coca growers have been killed by the Bolivian millitary during protests and at least five members of the security forces and police have died from sniper bullets and angry mob attacks. "Economically, Bolivia has great potentional", U.S. Ambassador to Bolivia Manuel Rocha, said recently. "Politically it has some storm clouds ahead." A 1994 decision by President Gonzalo Sanchez De Lozada opened the state-owned oil and pipeline sector to private joint ventures with foreign management control. The government's 50% share, held in the name of the Bolivia people, is about 13 TCF worth of gas reserves worth $13 billion. The shares can not be freely traded and are managed by private pension companies. The move, while still raising charges of corruption in Bolivia's congress, brought $1.5 billion in petroleum and gas investment into Tarija and lead to discovery of large gas finds in a subtropical wilderness known as the Gran Chaco. Gas being exported to the U.S. will come from the giant 10 to 15 TCF Margaritas field. Brazilian gas exports will flow largely from the Petrobras-operated San Alberto field. The first oil was discovered in Tarija by Standard Oil in 1924 and a series of wells were dug in the Chaco area over the decades. But it wasn't until the 1990 San Alberto find that great gas reserves were confirmed to exist. Centeno noted the first well,which was drilled to a deep depth of 14,816 feet struck one TCF of gas and 28 million barrels of petroleum, an enormous amount for just one well. "Its important to remember", Centeno said, "that when we began this work we were in seventh place in gas reserves in South America. In a short time we took a tremendous jump. We reached second place. And I'm saying without fear of being wrong that we are going to reach first place (surpassing Venezuela's 147 TCF). There's a possibility of over 100 TCF. And that is just in 5% of the potentional area in Bolivia where gas can be found." Whether Bolvia's gas boom will leave more behind than the faded glory of Potosi's silver mine will depend on how the government manages the opportunity. One factor will be whether other sectors of the Bolivian economy can also be developed, said Ed Miller, a spokesman for British Petroleum in Bolivia. "Some analysts have warned that unless Bolivia adds value to its energy resources and diversifies its production, the current boom could result in structural problems like the so-called Dutch Disease, whereby countries dependent on one raw material export suffer following the depletion of this resource." It is well known that the capital intensive energy projects will produce few jobs. And the government will have to channel its earnings into other types of employment creating activities if it is to have an impact on poverty. "This is a snowball," Centeno said, "And if we don't organize and prepare for it well the problems are going to grow and become unpredictable. We want to have good management and not end up poor after having been rich." ### ____________________________ |