By Franz Chávez
LA PAZ, Jun 19 2023 – One of the largest natural gas reservoirs in South America is showing signs of decline and the hopeful expectations that emerged in 2006, to turn Bolivia into a regional energy leader, are waning.

When the fossil fuel bonanza was already showing signs of fatigue, then president Evo Morales (2006-2019) announced in the middle of his election campaign, in March 2019, the discovery of what was described as a “sea of ​​gas” in the department of Tarija, in the south of the country.

But the certainty of a future natural gas boom gave way to a downward trend in the sector that is currently affecting production and sales and has shattered the hopes that gas would remain the engine of internal development for a long time to come, according to industry experts.

“They strangled the goose that laid the golden eggs,” said Gonzalo Chávez, an analyst with a PhD in economics, who pointed to a 3.2 billion dollar drop in gas revenues between 2014 and 2021. The decline is attributed to the lack of exploration of new reserves.

In 2014, oil and gas revenues amounted to nearly 5.5 billion dollars, compared to less than 2.3 billion dollars in 2021, according to Chávez’s calculations. The fall is considerable, more so given that in 2021, public spending totaled 2.6 billion dollars. The economy grew that year by 6.5 percent, according to the Ministry of Economy and Public Finance.

The state-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) “has shown that it does not now have the technical or financial capacity to explore or develop new fields,” economic analyst Roberto Laserna told IPS.

The company’s website reported that the investment in exploration and exploitation of hydrocarbons for the period 2021-2025 amounts to 1.4 billion dollars, and quotes its president, Armin Dorgathen, as stating that the aim is “to change this situation of the importation of fuels.”

On Jun. 12, the YPFB announced that the testing stage at the Chaco Este X9D oil well, located in the province of Gran Chaco in Tarija, “recorded hydrocarbon flows in two reservoirs,” as part of the effort the company is making to show that it is pulling out of the production rut.

Dorgathen announced that the discoveries will contribute an average production of 8.76 million cubic feet per day of natural gas and 281 barrels per day of crude oil.

Questions that IPS sent to YPFB a few days earlier, regarding the drop in gas revenues, received no response.

In the 21st century Bolivia remains dependent on hydrocarbons, both for its energy consumption – 81 percent of which comes from fossil sources – and for its tax revenue – 35 percent of which comes from the industry since the Hydrocarbons Law was introduced in 2005.

This landlocked Andean country of 12.2 million people has an economy traditionally based on extractive activities, especially tin, lead, zinc, copper, gold and silver mining, and more recently and abundantly on fossil fuels, after the discovery of large gas deposits at the beginning of this century.

One of the first measures adopted by Morales upon taking office in 2006 was the total nationalization of the industry, leaving the entire production and marketing chain in the hands of the YPFB. And thanks to the gas boom, 38 billion dollars in oil and gas revenues were obtained in the period 2006-2018, when the steady decline began.

A photo of the Chaco Este X9D well, exploited by YPFB in the Gran Chaco province of the department of Tarija in southern Bolivia. CREDIT: YPFB

Hasty actions

To try to pull out of the crisis, Minister of Hydrocarbons and Energy Franklin Molina announced on Apr. 28 to Congress 18 new exploration and exploitation projects, 11 of which are to be carried out this year, with an investment of 324 million dollars – a plan considered unrealistic by industry observers.

The 11 projects, where oil appears to take precedence over gas, are located in four of Bolivia’s nine departments: La Paz in the west,Tarija in the southeast, Santa Cruz in the east, and the central Chuquisaca.

“The fact that we do not have gas and we are net fuel importers is the fault of flawed government policies” in the sector, financial analyst Jaime Dunn wrote on his social networks.

According to the expert’s calculation, the fiscal deficit for the year 2022 reached 1.7 billion dollars, largely due to the fuel subsidy, because a 159-liter barrel of oil is bought on the international market for an average of 90 dollars and is sold domestically for 27 dollars.

Long gone are the “sea of ​​gas” dreams that in April 2002 led President Jorge Quiroga (2001-2002) and his Minister of Economic Development Carlos Kempff to announce that after a study of 76 oil fields by a US company, it was estimated that the country’s proven and probable gas reserves totaled 52 trillion cubic feet (TCF).

But only 10.7 TCF of proven natural gas reserves were certified in 2018.

The search for new reserves runs up against a legal framework that protects the environment and indigenous lands, where part of the probable sources of hydrocarbons are located. “The constitution contains many obstacles and restrictions to attract foreign companies with the capacity for exploration,” said Laserna.

The rewritten constitution, approved in February 2009, forces companies interested in exploration and exploitation to obtain authorization from the Plurinational Legislative Assembly, with the threat that any permit will be declared null and void if this requirement is not met.

Foreign companies, according to the constitution, are “subject to the sovereignty of the State,” which rules out arbitration and diplomatic demands as a way of solving conflicts.

A photo of the 15-story building of the headquarters of Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), located in La Paz, where the executive and organizational offices of the government-owned oil company have been operating since 2018. CREDIT: Franz Chavez/IPS

Environment and development

In terms of energy production, the constitution prohibits transnational corporations from exclusively managing concessions.

In addition, it places the environment above interests in economic uses of land and gives the local population the right to participate in environmental management, “to be previously consulted and informed about decisions that could affect the quality of the environment.”

These powers granted to indigenous peoples and local communities are protecting the Tariquía National Flora and Fauna Reserve, in the municipality of Padcaya in the department of Tarija, which covers 246,870 hectares, part of which is close to the border with Argentina.

Since 2017, Lurdes Zutara has been a local organizer fighting the entry of oil companies into the area, warning that since the first roads were opened to give access to exploration equipment and teams, the water from the local source that gives rise to rivers and streams has decreased in flow.

Speaking with IPS from her town in Tariquía, the activist said that some families in the communities accepted the entry of heavy machinery, and noted that municipal authorities belonging to the governing Movement to Socialism (MAS) party were facilitating the preparatory operations for oil exploration.

“The immediate risk is drought because the road affects the water intakes,” Zutara said.

She added that things will never be the same, that the relationship among local inhabitants will change because inequalities will emerge between those who obtain development with the support of the company and others who will be left out.

Bolivia is officially a multinational country located in the center of South America, where 41 percent of the population of 12.2 million consider themselves indigenous, according to the last census.

The United Nations Development Program (UNDP), based on data from the National Statistics Institute (INE), described in its latest report on human development the persistence of significant inequalities by geographic area, ethnicity, gender, and socioeconomic status.

In 2018, 54 percent of the inhabitants of rural areas suffered from moderate poverty and 33.4 percent from extreme poverty, compared to 26 and 7.2 percent, respectively, in urban areas.

Against this backdrop, Chávez the economist lamented that Bolivia went from being a major gas reserve in the South American region “to an importer” of fuels, with the subsequent impact on social development.

Laserna concurred, stating that “the outlook for the country is very discouraging” with respect to gas and the expected socioeconomic boost that was to come from fossil fuels.

By Dörte Wollrad
MONTEVIDEO, Uruguay, Jun 19 2023 – Drinking water is running out in Uruguay — this headline got the small South American country onto international news. Prolonged drought has brought the reservoir and river that supply the capital Montevideo down to 10 per cent of their normal water level. Unless the rain comes, there is sufficient water only until mid-June, at best.

Paradoxically, Uruguay is located in a region that holds more than 30 per cent of the world’s freshwater reserves. So, there is groundwater. But the fact that drinking water is available only to those able to buy it in bottled form highlights rather different political priorities. Amidst the climate crisis, short-term economic interests have been prioritised over prevention, mitigation and adaptation.

Economic interests prevail

Water supply is not a new issue in Uruguay. As early as 2004, 65 per cent voted in favour of a referendum on a constitutional amendment to establish access to drinking water as a fundamental right. It also gave the state exclusive responsibility for water treatment and supply.

Experienced in direct democratic procedures, Uruguayans thus prevented the participation of French and Spanish companies in the public water utilities and a possible privatisation, as was the case in other countries in the region.

Dörte Wollrad

Uruguay’s economy depends on commodity exports; cellulose, beef, rice and soya, to name a few. In all these sectors, the production is highly water-intensive. The latest drought has caused enormous losses in recent months, but this is not an isolated incident. Meteorologists have been warning of a huge reduction in precipitation for more than three years now.

That is why outgoing President Tabaré Vasquez passed on construction plans for another reservoir to Luis Lacalle Pou’s newly elected government in 2020. The aim was to avoid foreseeable supply bottlenecks. But the reservoir was never built. Also, discussions on a transformation strategy for a development model that, due to climate change, has a foreseeable expiry date did not happen.

Instead, the new neoliberal government approved foreign investment projects that are extremely water-intensive and fed by groundwater wells. For example, in 2021, Google started the construction of a gigantic data centre, which requires 7 million litres of fresh water every day to cool the servers.

In 2022, an agreement was reached with a German firm on the production of green hydrogen in northern Uruguay, which requires 600,000 litres of fresh water a day. There was no parliamentary vote on either project and thus no democratic participation.

Despite the recent lack of rainfall, there has been no attempt to tap into the groundwater to obtain drinking water. Instead, since early May, estuary water from the Rio de la Plata has been mixed in with remaining reserves. As a result, drinking water now considerably exceeds the sodium and potassium levels laid down by the Health Ministry. And people only became aware of this because the water was now noticeably salty.

After contradictory messaging on whether tap water could be drunk, finally, the Ministry recommended that old people and invalids stick to bottled water. It remains to be seen how hospitals, schools and day-care facilities will obtain the drinking water they need.

When asked what the poor are supposed to do (10 per cent of the population live beneath the poverty line), the deputy chair of the state-owned water company said that people should give up Coca-Cola for water. Marie Antoinette sends her regards.

A government feeding lies

Trade and industry were the next to suffer from the problems of water quality. Can saltier water be used in certain production processes without damaging machinery? Can bakers raise bread prices to cover the cost of drinking water without suppressing demand, already hard hit by Covid-19?

As in Europe, Uruguayans are also grappling with high inflation, which reached double figures before stabilising at 9 per cent. But even this level is unlikely to be maintained. The government broke its promise to keep the price of bottled water under control.

In many places ‘Blue Gold’ is out of stock and, where it is available, priced the same as Coca-Cola. Now, there are plans afoot to import bottled water from neighbouring countries.

Despite being under increasing pressure, the government knows how to use the situation to its advantage. It feeds the neoliberal narrative that public companies are incompetent. What’s more, salty drinking water makes it easier for the government to gain acceptance of its ongoing negotiations on building a river-water desalination plant. The ‘Neptuno’ project is facing strong protests, highlighting its potential environmental damage, high costs and de facto partial privatisation of water as a resource.

But the problem is not new. Previous governments formed by the progressive coalition Frente Amplio also failed to focus consistently on transforming the development model. Although the energy matrix has been almost entirely converted to renewable energies in only a few years, soya cultivation and pasture lands, as well as eucalyptus plantations for cellulose production grew even under progressive rule.

The renovation of old pipelines was also delayed so that now 50 per cent of drinking water just seeps away. There are no incentives for more frugal private water use, either. Only now are radio commercials calling on people to refrain from washing their cars or watering their gardens have started to be broadcasted.

However, one thing was guaranteed during the 15 years of the Frente Amplio government: the state’s responsibility for water and other essential goods. Today, the citizens no longer even believe the waterworks with regard to the measured values of the tap water. The loss of trust in the state’s duty of care is enormous.

The effects of climate change on the water supply are also discernible in Europe. Just look at the crisis in Spain’s agricultural sector or the drying up of whole bodies of water from the Aral Sea to Lake Garda. Nevertheless, few people in Europe can imagine a day they might turn on the tap and no water comes out.

But the battle for the Blue Gold has long begun. Fresh water is not the gold of the future but of the present. And as with any resource allocation conflict, it needs political and legal regulation. This applies in particular to the governments and parliaments of the countries concerned. But criticising mismanagement in the Global South is pointless in isolation.

Climate change knows no borders. That’s why we need to challenge our own national and community policymakers on this issue. What signal do trade agreements send that reinforce Latin America’s role as a raw materials supplier?

How can food security be ensured while conserving water? What guidance, investments and technologies do the production countries need? And what incentives would facilitate change away from consumption and thus demand?

Global public goods such as fresh water need global protection and international regulation. Unless we think about and promote socio-ecological transformation in global terms, climate justice will remain a pipe dream and the rule of the market will dominate resource distribution. Our joy at sourcing green hydrogen from Uruguay in place of wind turbines down the road is thus likely to prove short-lived.

Dörte Wollrad heads the office of the Friedrich-Ebert-Stiftung (FES) in Uruguay. Previously, she led the foundation’s offices in Argentina and Paraguay.

Source: International Politics and Society (IPS), published by the Global and European Policy Unit of the Friedrich-Ebert-Stiftung, Hiroshimastrasse 28, D-10785 Berlin.

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By Busani Bafana
BULAWAYO, Jun 19 2023 – Vulnerable countries, banking on robust climate negotiations, want an inclusive funding package to help them with the devastating impacts of climate change.

The poor progress at the 2023 Bonn Climate Change Conference, known as the 58th session of the Subsidiary Bodies of the United Nations Framework Convention on Climate Change (UNFCCC), has dampened hopes for successful climate negotiations at COP 28.

SB58, which closed in Bonn, Germany, last week, was marked by wide disagreements, including the adoption of the agenda. The session ended without concrete outcomes on an array of key issues, such as the operationalization of the Loss and Damage Fund, the mitigation work programme, the global stock take (GST), and the global goal on adaptation (GGA).

Yamide Dagnet, Director for Climate Justice at Open Society Foundations. Credit: TJ Kirkpatrick, Open Society Foundations

“Even when we do not like the pace that the negotiations have gone, we have to find a way to a solution sooner than later; human existence is at stake,” Yamide Dagnet, Climate Justice Director at Open Society Foundations (OSF), told IPS.

The foundation has been supporting the climate change community in pushing for solutions.

“We need to see more efforts to make the whole society more resilient.”

She said having a financial package for investment and development aligned with the Paris Agreement was crucial.

Dagnet said there was an urgent need to support building resilient communities because climate change impacts are becoming more frequent and severe, destroying lives and livelihoods, particularly in vulnerable countries. Furthermore, the extreme weather events have also destroyed communities and cultures and damaged property.

“We need to work hard, sweat, and speed the pace of negotiations on our ability to find common ground and avoid a zero-sum game,” said Dagnet, a former climate change negotiator. She underscored that the Bonn meetings matter because they are laying the ground for discussions at COP28 and highlighting areas of cooperation and division.

The Intergovernmental Panel on Climate Change (IPCC), in its recent report, has called for accelerated action to adapt to climate change while cutting greenhouse gas emissions, warning of a huge gap in actions currently underway and what is needed to deal with the increasing risks.

Developed countries have called for the inclusion of adaptation in the GST.

Ephraim Mwepya Shitima, Chair of the African Group of Negotiators (AGN) developing countries’ commitment to mitigating climate change, should be recognized. He called for an additional message in the GST to acknowledge this “strong demonstration of commitment by vulnerable countries in the face of inadequate international support.”

Vulnerable countries want mitigation and adaptation to be included in a negotiated package at COP28, Dagnet said, noting that the G7 should fulfill their promise to provide adaptation finance.

“The financing of the Loss and Damage is part of the financing package that is needed. But we need to focus on everything, including mitigation and adaptation for vulnerable countries; otherwise, COP 28 will not achieve anything,” she said, highlighting that countries must develop more ambitious climate plans.

The Paris Agreement, adopted in 2015, agreed to keep the increase in the global average temperature to well below 2° C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.

However, scientists have warned that the world is off target in emission reduction, and the influential UN Intergovernmental Panel on Climate Change (IPCC) has indicated that going beyond the 1.5°C threshold risks unleashing severe climate change impacts, including more frequent and severe droughts, heatwaves and rainfall.

The agreement also recognized that developed countries should take the lead in providing financial assistance to poor and vulnerable countries while encouraging voluntary contributions by other Parties.

Zimbabwean farmer Lindiwe Ncube gestures in an empty field in Bubi District in Matabeleland North province, where she harvested a only few bags of maize during a period of drought. Credit: Busani Bafana/IPS

“Climate justice is to be fought for. This is a process, and if we are to make progress in the operationalization of a fund created at COP 27, we need to get clarity on how we can bring in money to that fund, and such money should not be increasing debt for vulnerable countries,” she noted.

Climate finance is a nagging issue for vulnerable countries already suffering the impacts of climate change. They need to adapt and mitigate against climate change by shifting to cleaner energy and making food systems resilient to the impacts of droughts, high temperatures, and floods.

Developed countries, wary of liability, have not delivered the finance they pledged to help vulnerable countries reduce emissions and adapt to climate change. The $100 billion a year financing pledged 20 years ago has not been delivered, and prospects are dim that it will. The envisaged Loss and Damage Fund—if COP28 operationalizes it—will help vulnerable countries cope with climate-induced disasters.

Dagnet says there is a need for innovative financing for loss and damage, such as tapping blended finance, philanthropy, taxes, and levies on some economic sectors, such as fossil fuels and aviation.

UN Secretary-General Antonio Guterres recently proposed that rich governments tax fossil fuel companies’ windfall profits. The Marshall Islands have also proposed levies on shipping through the International Maritime Organization. At the same time, other ideas for funding adaptation have included levying a small fee on international flights—which contribute to climate-heating emissions—and a global tax on financial market transactions, which the new fund could distribute.

While COP 27 prioritized the establishment of the Loss and Damage Fund, COP 28 is not about cherry-picking an issue to progress on, Dagnet argues, suggesting that the state of the Paris Agreement is key in climate negotiations.

“We need to deliver on all pillars of the Paris Agreement and demonstrate progress,” she said. “We are far from the Paris Agreement goals. The push for energy efficiency targets is really good, but at the same time, we cannot have the message that we will continue business as usual with fossil fuels.”

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