-Caveat Lector- WJPBR Email News List [EMAIL PROTECTED] Peace at any cost is a Prelude to War! Energy Forecast: Bolivia 1930 GMT, 010803 Summary To stimulate Bolivia's moribund economy, incoming President Jorge Quiroga must find new ways to transport large reserves of natural gas to new markets. Building new pipelines would require billions of dollars in foreign investment - but as indigenous and farming groups turn up the heat on Quiroga, that investment will become increasingly difficult to secure. Analysis Bolivian President Hugo Banzer announced July 27 that he will resign in order to undergo treatment for liver and lung cancer in the United States. Banzer will cede his final year of power to his vice president, Jorge Quiroga, on Aug. 6. Quiroga needs to make fast, concrete progress on reinvigorating the Bolivian economy in order to mount a viable campaign for a full term in 2007. One of his few options is to further develop the landlocked country's large natural gas reserves for export. With Bolivia's main gas customer, Brazil, failing to meet demand expectations, Quiroga will promote a proposal to export liquefied natural gas (LNG) through Chile to the United States and other markets. But rising social instability during Quiroga's abbreviated term will emerge as a powerful disincentive to investment. Without further investments to extract and transport Bolivian natural gas, exploration and extraction activity could fall off dramatically. This would be bad news not only for Bolivia but the entire southern cone of South America, where countries such as Brazil and Argentina increasingly depend on natural gas to generate electricity. The United States also stands to benefit from increased gas exports; Bolivia would particularly like to sell gas to power-strapped California. Quiroga - a 41- year-old, Texas-educated technocrat and former IBM executive - now has a year to build a record from which to launch a presidential campaign in 2007, when he next is eligible to run for the position. His first priority will likely be to stimulate the economy. Bolivia is one of the poorest countries in Latin America, and poverty worsened considerably under Banzer as austerity measures sapped economic growth. Annual GDP rose by 0.6 percent in 1999 and grew a tepid 1.5 percent in 2000, according to Agence France-Presse. The greatest economic hardship for most Bolivians has been the destruction of the coca economy. U.S.-backed eradication efforts undertaken by Banzer's government have destroyed almost 90 percent of the country's coca-producing capacity, translating to lost income estimated at $200 million to $300 million annually, AFP reported July 29. The austerity and eradication programs have fueled almost constant protests and three general strikes during the last year. The most recent protests blocked a major section of the Pan-American Highway between Bolivia and Peru for more than a month in June and July, eventually disrupting food supplies to major cities. Quiroga must find a way to stimulate the economy, but his options are few. He likely will turn to Bolivia's primary natural resource: its large natural gas reserves. Found reserves have grown 600 percent during the past three years due to aggressive exploration by companies like Total Fina Elf and Brazilian state company Petrobras, the Oil Daily reported May 16, citing a Wood Mackenzie report. The same report also notes, however, that Bolivia "has a serious stranded gas problem." Lack of infrastructure limits the markets to which Bolivia can sell natural gas. In a July 2001 report, the Energy Information Administration (EIA), an arm of the U.S Department of Energy, put Bolivia's proven natural gas reserves at 18.3 trillion cubic feet, with likely reserves as high as 70 trillion cubic feet The Wood Mackenzie report estimates that Brazil, Bolivia's primary export customer, will absorb only 7.7 trillion cubic feet during the next 20 years. The Brazilian market is proving even less reliable than hoped, however. Brazil has failed recently to complete several gas-powered electricity projects that Bolivian gas producers anticipated. The country also has expanded its own gas production. Meanwhile, the specter of a financial meltdown in Argentina - with subsequent damage to Brazil - could further depress demand for Bolivian gas. Quiroga will therefore push for new methods to get Bolivian gas to market. The most likely scenario is a plan to ship gas from the large Margarita field in southern Bolivia through a pipeline to a coastal port in Chile, where it would be liquefied. Much of the LNG would be shipped via Mexico to the United States. The EIA estimates that this project would cost $6 billion to $7 billion. The United States has a track record of investing in such projects. For instance, Bolivia and Brazil turned to Washington and Western corporations when building the 2,000-mile Bolivia-Brazil pipeline, which opened in 1999 at a cost of $2 billion. Part of the deal included a $200 million loan from the Overseas Private Investment Corp. to U.S.-based Enron. Bolivia's hopes of attracting U.S. support will increase pressure on Quiroga to stay the course with fiscal austerity and coca eradication. Knight Ridder reported July 29 that Quiroga said he expects to continue with the country's coca eradication campaign. But the strategy is dangerous: Nationalist and indigenous groups could seize on Quiroga's strong U.S. ties and pro-business philosophy, as well as his fund-raising efforts in developed countries, to fuel greater social protests. Quiroga is in a box. If he attempts to meet the demands of protestors upset by poverty and coca eradication, he risks losing Washington's support for the natural gas project. Without that support, the necessary infrastructure might never be developed. Ignoring protestors, however, would only increase Bolivia's political instability, scaring companies and private investors away from the natural gas project. Quiroga's administration must come up with a strategy to allow more gas exports to other markets while at the same time quelling public discontent. If it fails, further investment in Bolivian gas fields could prove unprofitable and production could begin to fall. This would mean a lost opportunity for Bolivia as well as lost supplies of natural gas for South America and the United States. *COPYRIGHT NOTICE** In accordance with Title 17 U. S. C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment to those who have expressed a prior interest in receiving the included information for nonprofit research and educational purposes only.[Ref. http://www.law.cornell.edu/uscode/17/107.shtml ] Want to be on our lists? Write at [EMAIL PROTECTED] for a menu of our lists! <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! 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