The benefits of Bolivia's natural gas export boom are coming to an end. Presently, natural gas accounts for nearly half of Bolivian export revenue by value, mostly because of rising production from three major natural gas fields in southeastern Bolivia's Tarija department. La Paz's annual income from natural gas exports rose from $2.8 billion to $6 billion between 2010 and 2014, but natural gas prices are heavily influenced by the price of fuel oil in Brazil and Argentina.
Argentina is of particular concern to Bolivia. It has been an important destination for Bolivian natural gas since Argentina's own natural gas production began declining in the mid-2000s. The next Argentine president, however, will likely begin taking the first tentative steps toward addressing Argentina's economic stagnation, including liberalizing the energy sector. For Argentina to improve its attractiveness to foreign investors, the next president will have to significantly relax currency controls in place since 2011, ease import restrictions that currently limit companies' ability to bring equipment into the country, and reassure foreign firms that their holdings will not be expropriated and that the regulatory environment will not change quickly because of shifting political priorities.
The adjustments needed to grow foreign investment in the energy sector probably will not occur during the next Argentine presidential term. But when they are eventually implemented, energy investments in Argentina will likely raise its production, diminishing Bolivia's share of the Argentine natural gas market in the process. However, this boost in Argentine natural gas production is likely at least a decade away, and Bolivian natural gas exports will remain secure in the medium term.
