Bolivian state energy firm YPFB is actively seeking to revitalize the country’s struggling oil and gas sector by attracting new investments and securing assistance from Russia to address recent fuel shortages, as reported by the company’s president, Armin Dorgathen, in an interview with Reuters.
The landlocked South American nation has been grappling with the aftermath of a thwarted military coup attempt against the government last week. This political turmoil stems partly from an escalating economic crisis driven by years of declining oil and gas production, which has severely depleted the nation’s hard-currency reserves.
In the interview, conducted just days after the failed coup on June 26, YPFB President
Armin Dorgathen acknowledged that political missteps in recent years had deterred investors, significantly affecting production. Gas production has plummeted to half of its peak from a decade ago, and oil output has reached its lowest point since the 1990s.
“We are working to attract financing from various sides and also looking for partners,” Dorgathen told Reuters earlier this week. He cited issues with payments, legislation, and regulation under the country’s largely socialist leadership in recent years, which had made it challenging for private firms—a situation that YPFB is now striving to change.
“The sector was discouraged,” he said. “We are now working also with the partners we already have here in Bolivia—Repsol, TotalEnergies, Petrobras—so that additional investments can be made.”
The sharp decline in domestic oil and gas output has been central to Bolivia’s recent economic and political challenges. Once a significant gas exporter to neighboring countries like Brazil, the drop in production has severely impacted export revenue and left central-bank reserves nearly depleted.
Protests related to the lack of dollars and long queues at gas stations have become increasingly common, escalating tensions and leading to internal conflicts within the ruling socialist MAS party between President Luis Arce and former leader Evo Morales.
President Arce narrowly avoided a coup attempt last week when a rogue general led units of armed soldiers to seize the central square in La Paz, Bolivia’s political capital. This included ramming the door of the presidential palace with an armored vehicle. The general cited the deteriorating economy as one of the reasons for his rebellion.
In the short term, Dorgathen identified the most pressing energy issue as a gasoline shortage, which has highlighted the high costs of imports. Bolivia currently imports half of the gasoline required to meet domestic demand, amounting to approximately $800 million annually.
To address this, Dorgathen told Reuters that the country is shifting towards more direct—and lower-cost—purchases from producers in the Organization of the Petroleum Exporting Countries (OPEC) and others through its new state energy trading firm, Botrading S.A.
“Our objective through OPEC is to access cheaper fuel and improve supplies,” Dorgathen said. The government is also seeking assistance from Russia, a member of the OPEC+ coalition, to ease fuel supplies. Russia has faced sanctions on energy exports following its 2022 invasion of Ukraine. Despite this, Russia’s Lukoil delivered 366,000 barrels of diesel to YPFB from the Baltic Sea port of Vysotsk on June 19.
Dorgathen attributed the steep decline in gas production to a lack of investment in exploration. However, he stated that income from exports is “being maintained” and disputed any issues with domestic gas supplies. He expressed optimism about the announcement of a significant new find later this year.
“There is no internal supply problem,” Dorgathen asserted. “We still produce almost three times more gas than we consume.”
Despite the challenges, YPFB remains focused on attracting investment and improving conditions for the oil and gas sector. By fostering partnerships with existing players like Repsol, TotalEnergies, and Petrobras, and seeking new opportunities through OPEC and Russian support, Bolivia aims to stabilize and eventually boost its energy production.
