31 Oct The story of a country that did much for one of his sons and a son who did much for himself
The natural gas export contract with Brazil is undoubtedly one of the most important export projects of the country over the last 50 years. Not only because of the challenges faced from the outset regarding the magnitude of the investment, the need to open a market for natural gas in Brazil, and the necessity of increasing reserves, but also because of the positive impact this project has had on Bolivia’s economy over the last 10 years. For this reason, I find it pertinent to detail the work carried out in the past to bring this project to fruition:
May 24, 1974: During a presidential meeting, the Agreement on Cooperation and Industrial Complementation between the Republic of Bolivia and the Federative Republic of Brazil was signed. This agreement outlined a cross-border industrial complementation project (including iron, urea, and cement production) and the sale of Bolivian natural gas to Brazil, aiming to establish a strategic alliance between the two nations.
August 2, 1982: In another presidential meeting, efforts were made to advance the 1974 agreement, with a particular focus on the purchase and sale of natural gas.
August 2, 1988: During a subsequent presidential meeting, Reversal Notes were signed, formalizing commitments for the purchase and sale of natural gas products, electricity (500 MW), and 3 million cubic meters per day (MMcmd) of natural gas.
November 29, 1991: A Letter of Intent between YPFB and PETROBRAS established an agreement to sell and purchase 8 to 16 MMcmd of natural gas.
March 25, 1992: YPFB and PETROBRAS agreed to construct the gas pipeline along the Puerto Suárez-Corumbá border route during a bilateral meeting.
August 17, 1992: Several key documents were signed:
The Preliminary Contract for the Signing of a Gas Sales Agreement.
The Partial Scope Agreement for Trade Promotion between the Republic of Bolivia and the Federative Republic of Brazil.
The Framework Agreement, which sets the conditions for natural gas export and import commitments. These agreements exempted natural gas transactions from import duties, export taxes, and other non-tariff restrictions.
February 17, 1993: In Cochabamba, the presidents of Bolivia and Brazil signed the YPFB-PETROBRAS Gas Sales Agreement and Reversal Notes on the Gas Sales Agreement.
August 5, 1996: In Brasilia, the governments of Bolivia and Brazil signed the Agreement for Tax Exemption Related to the Implementation of the Bolivia-Brazil Gas Pipeline Project.
August 16, 1996: Two additional agreements were signed:
An expansion of the Gas Sales Agreement signed on February 17, 1993.
An Advance Payment Contract for Transportation Tariffs by Petrobras to finance the Bolivian segment of the gas pipeline.
September 4, 1996: Construction of the Bolivia-Brazil gas pipeline officially began following a presidential meeting.
February 9, 1999: The Bolivia-Brazil gas pipeline was inaugurated, spanning the Río Grande (Santa Cruz, Bolivia) to Campinas (São Paulo, Brazil) segment. Subsequently, on March 16, 2000, in Brasilia, the contractual gas volume was increased to 30.08 MMcmd.
The main characteristics of the contract are:
A 3,100 km gas pipeline from Río Grande, Bolivia, to Porto Alegre, Brazil.
A contractual volume of 30.08 MMcmd.
Export prices indexed to international fuel oil basket prices.
A Take or Pay clause for 80% of the contracted volume.
What Did This Project Mean for Bolivia?
The following figure illustrates how 25 years of groundwork (as previously detailed) led to two distinct periods of harvesting. The first harvest, from 1999 to 2006, occurred when prices and volumes were relatively low. The second, from 2006 to 2015, marked a period of unprecedented success, with Bolivia exporting natural gas to Brazil at historically high international prices and volumes. During this second harvest phase (highlighted in blue), the export project to Brazil was responsible for driving and generating half of the country’s economic growth.
The issue here is not that an entire country labored for its children, particularly for one of them. The real problem, in my view, lies in the fact that the 2006–2015 period was exclusively one of harvesting, with sowing relegated to the background.
To conclude, dear reader, I pose this question: Is it morally justifiable to eliminate, disregard, undermine, denigrate, insult, harm, or erase all that was carefully sown in the past?
S. Mauricio Medinaceli Monrroy
La Paz
October 31st 2017
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