Political Crisis Hurts Oil Majors In Bolivia

Royal Dutch Shell, Total SA, and Repsol SA have all either stopped drilling exploration gas wells, or slowed drilling in Bolivia, Alvaro Rios, former hydrocarbons minister and director of consultancy firm Gas Energy Latin America told Bloomberg on Monday, as the country’s political crisis continues to spiral out of control.

Bolivia’s former president, Evo Morales, announced his resignation over the weekend in a sign that foreign energy companies operating in Brazil may want to hunker down. The former president resigned, according to Morales, after being forced out in a coup. The country’s hydrocarbons minister has also resigned.

The step-down has left Bolivia without a leader—of the country or of the oil and gas sector--a fact that has made foreign oil and gas companies nervous.

 “Some of the exploration wells have been stopped,” Rios told Bloomberg.

Bolivia’s oil and gas revenues have already fell by half since 2014—a significant contributing factor to the country’s blooming debt. Gas exports are its primary source of revenue.

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In a separate report, Repsol—the country’s number one private producer--said on Monday that its output has held steady despite the in-country turmoil, according to Argus Media. Its June production was 42,000 boepd. It did not comment on its current drilling activity, however.

Shell has since closed its administrative offices in Santa Cruz and La Paz, and its employees are working from home. Its Jaguar exploration well team has been reduced, and its Yapucaiti exploration has been halted.

The country’s fledgling lithium industry is also on shaky ground, with a recent deal gone bad—without explanation--between Bolivia’s state-run YLB and Germany’s ACI Systems. Bolivia is thought to hold the world’s largest identified reserves.

By Julianne Geiger for Oilprice.com

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