Bolivia Gas Exports Spike in 2006, But Party May Be Over

Bolivia’s natural gas export sales rose spectacularly in 2006, but the party may soon be over.

While the thirst for gas in neighboring Brazil and Argentina continues unabated, virtually no fresh investment is being made in new production as companies lick their wounds after last year’s oil and gas nationalization.

“I think the companies will be cautious — making just enough investment to keep a foothold,” said Gary Hufbauer, senior fellow at Institute for International Economics, a Washington think-tank. “One reason is the trauma (they’ve) already experienced.”

Foreign oil companies have spent more than $3.5 billion to develop Bolivia’s vast natural gas resources in recent years, but new investments ground to a halt after Bolivian President Evo Morales nationalized the oil and gas industry on May 1 last year, and hiked taxes on production to about 80% of revenues from the previous 50%.

Dow Jones Newswires