IHS Global Insight Perspective
The Río Grande discovery is already being described in the local press as another "mega-field", although in truth it is rather on the small size when compared to some of the other contenders for this title—such as the Margarita field with an estimated 13.4 tcf of reserves, San Alberto with 11.9 tcf, or Itaú with 10.39 tcf.
Nevertheless the announcement is a significant one. Not only does the RGD 22 well-deepening project reaffirm Repsol's continued commitment to its investments in Bolivia following the earlier nationalisation of Andina, but it also provides an indication of the potential for significant finds to be made even in areas where production has already been under way for some years.
The new find will boost the country's reserves as well as providing increased gas supplies that will help Bolivia to meet its export commitments with neighbouring countries and demand from the domestic market.
Repsol Announces New Gas Find
The Spanish company, Repsol, has released a statement announcing a gas find at the RGD 22 well in the Río Grande contract area. Repsol said that the well flowed at 6 mmcf/d of gas with 160 b/d of condensate in initial production tests. Further wells will be needed to establish the precise size of the find, but initial estimates point to 1 tcf of gas reserves. This represents sufficient gas to supply Spain's demand for 10 months. Although not as large as Repsol and its partner Eni's gas discovery last year off the coast of Venezuela, the Bolivian find is crucially located in an area that already has the necessary infrastructure in place to enable it to be brought into production relatively quickly (see Venezuela: 12 April 2010: Repsol, Eni Confirm Positive Results at Second Well in Venezuela's Cardón IV Block and Venezuela: 16 October 2009: Eni, Repsol Confirm Large Offshore Gas Find in Venezuela). The Río Grande area is operated by YPFB Andina, a company controlled by the Bolivian state oil company YPFB and Repsol. The field was discovered in 1961 by Gulf Oil Corporation, and has been in production since 1968. The latest discovery, however, is in a different geological formation.
The Spanish company is already a leading oil and gas producer in the country, with its net proved oil and natural gas reserves in Bolivia at the end of 2009 estimated at 102 mmboe. Repsol reaffirmed plans to increase investments in the country in November 2009 when it pledged to invest 400 million euro (US$521 million) over five years in a project to develop the Caipipendi Block, which includes what is thought to be Bolivia's largest hydrocarbons deposit, the Margarita field, as well as the Huacaya field discovered in 2008. The company said at the time that the project would raise its gas production in Bolivia sevenfold to reach 14 mmcm/d in 2013.
Uncertainty over Bolivia's Reserves
Confirmation of another large field that will rank amongst (but some way behind) the country's existing "mega gas fields”—Margarita, San Antonio, San Alberto, Itaú, Incahuasi, and Huacaya—will boost Bolivia's reserves and reaffirm the country's gas potential. Exactly how much gas Bolivia holds is unclear as no official reserve figures have been released since 2005, when consultants DeGolyer and MacNaughton certified the country's proven and probable natural gas reserves at 48.7 tcf. The 2005 reserve estimates marked the continuation of a downward trend due to a slowdown in new exploration. Another consultancy, Ryder Scott, has been awarded a contract to conduct a new certification up to 1 January 2010, whose results are due to be revealed in September. The Río Grande find is too recent to be incorporated but the likely inclusion of the Huacaya discovery and the Incahuasi field, as well as several other smaller finds, may prevent the new figures from being as bad as they might have been, had they been released a few years earlier, when investment in new exploration was effectively frozen.
Outlook and ImplicationsUncertainty over demand for gas exports and political and regulatory uncertainty, rather than insufficient reserves, have been the main obstacles to increased gas production in recent years. Nevertheless, the opportunities for growth have started to improve following the signing earlier this year of an addendum to Bolivia's gas sales contract with Argentina that anticipates exports to that country rising fivefold in the coming years to 27.7 mmcm/d (see Argentina: 29 March 2010: Bolivia, Argentina Agree to Amend Gas Contract). This year has already seen a marked increase in exports to Argentina, with reports that supplies of Bolivian gas have actually exceeded contracted volumes during the recent cold snap (see Argentina: 6 August 2010: Argentina Reduces Subsidies As Gas and Power Demand Rises). A further indication that the project to raise exports to Argentina is moving forward came earlier this week, with the Argentine president Cristina Fernández de Kirchner's signing of a contract related to the Juana Azurduy gas pipeline. Talks are also advancing over the possibility of gas sales to Uruguay, either via a proposed pipeline through Paraguay or via the existing pipeline network connecting Argentina with Uruguay. In this context the discovery of new reserves that will provide increased gas supplies to meet demand from Argentina is to be welcomed, although it will be the larger fields in the Caipipendi Block that will be the main source of future gas production for the Argentine market.