Bolivia - Vuelta Grande Gas Recycling Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6181-BO STAFF APPRAISAL REPORT BOLIVIA VUELTA GRANDE GAS RECYCLING PROJECT June 4, 1986 Energy Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Bolivian Peso ~$b) US$1 $b 2,000,000 a $b 1,000,000 US$0.50 FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES Megawatt (MW) thousand kilowatts Gigawatt-hour (GWh) million kilowatt-hours Barrel (Bbl) 0.159 cubic meters (cu m) Cubic Foot (CF) 0.028 cubic meters (cu m) British Thermal Unit (Btu) 0.252 kilocalories (Kc) Mile 1.609 kilometers (km) Bbl 0.1765 CF MMBbl million barrels GLOSSARY OF ABBREVIATIONS BCF billion cubic feet BD Barrel per day CIF Cost, Insurance, Freight EC European Community ENDE Empresa Nacional de Electricidad ENFE Bolivian Railways ERR Economic Rate of Return FOB Free on Board FRR Financial Rate of Return IDB Inter-American Development Bank LIB Limited International Bidding LPG liquified petroleum gas (propane/butane) MCF thousand cubic feet MEH Ministry of Energy and Hydrocarbons MMCF million cubic feet MMCFD million cubic feet per day NYSCRF New York State Common Retirement Fund OLADE Latin American Organization for Energy PPF Project Preparation Facility RIC Reconstruction Import Credit TCF trillion (1,000 billion) cubic feet tpy metric t^ns per year YABOG Yacibol Bogoc Transportadores, a subsidiary of YPFB YPFB Yacimientos Petroliferos Fiscales Bolivianos (BoLivian National Oil Company) Note: A standard cubic foot of gas is the amount of gas at sea level atmospheric pressure and 60 Fahrenheit contained in one cubic foot of space. a/ Because of high domestic inflation rates and volatile exchange rates, project costs and financing are solely expressed in US$.  BOLIVIA VUELTA GRANDE GAS RECYCLING PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. INTRODUCTION ........................ *...****.*...... 1 II. THE ENERGY SECTOR... ...... ******4* *4*4 ******** **4**4* *** . 1 Ao Overall Energy Position................................ 1 Resources ...o.ooo.o... too .............................. 1 Production and Consumption. ........... oo.....o..... o 2 Government Institutions. o .o ...... *.........o . . . . 2 Energy Assessmento................... .............. 2 B. Hydrocarbon Sector3............... 3 3 Hydrocarbon Exploration...........o. oooo...... ......o... 3 Productiono..ooo...................................... 4 Domestic Demand ....................................... 6 Hydrocarbon Exports and Importso.*o.................... 6 Demand/Supply Balance.................................. 8 Petroleum Prcn ..................................10 Economic Impact of the Hydrocarbon Sector.............. 12 Sectoral Strategy. ........ 44444.444...**4*. .......... 12 Role of the Bank G 13 III. THE PROJECT EXECUTING AGENCY.o............................ 16 A. Organization and Management ............................ 16 Background and Scope of Activitiesoo-oo............... 16 Organization and Staffing...#**.*.,**................. 16 Accounting, Auditing and Insurance..................... 17 YPFB Restructuring * . .. .... so*#**** 18 B. Financial Performance ..... ........ 18 Past Financial Performance ............................. 18 Investment Program.... 4.. ........... 20 Financial Projections................ 24 Financial Covenants..** ............................... 26 IV. THE PROJECT.... ****......................... 28 Project Objectives.., .........##............ 28 Project Description... **** *44444.............** 28 Status of Project Preparation... ...................... 29 Project Implementation. ........ .. . .. ...... . 29 Project Cost Estimate..ooso ......... ............ 30 Project Financing Plan................. ........... .. 31 Procurement and Disbursement ........ ........ 444 *4.4.4 32 Accounting, Auditing and Reporting ....... ..............o . 34 of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. This document has a restricted distribution and may be used by recipients only in the performance~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~  Page No. V. PROJECT RISKS AND BENEFITS ......................... ...... ... 35 Rate of Return Calculation................................ 35 Environmental Considerations and Safety................. 37 Project Risks ..... .... 37 VI. SUMMARY OF AGREEMENTS AND RECOMMENDATION .................. 38 Recommendation.........*...................... ..... .***. 39 LIST OF ANNEXES ANNEX 1: Reserves and Production Forecast of Crude Oil and Condensate.............................. ANNEX 2: Reserves and Production Forecast of Natural Gas........ ANNEX 3: Technical and Engineering Annex........................ ANNEX 4: Project Implementation Schedule...........o............ ANNEX 5: Assumptions Underlying the Financial Projections....... ANNEX 6: Project Cost Estimate............................... ANNEX 7: YPFB - Income Statements 1979-1993..................... ANNEX 8: YPFB - Balance Sheets 1979-1993 ....................... ANNEX 9: YPFB - Projected Funds Flow Statements 1984-1993....... ANNEX 10: YPFB - Financial Ratios Analysis....................... ANNEX 11: Disbursement Schedule............................... ANNEX 12: Financial Rate of-Return .............................. ANNEX 13: Economic Rate of Return.................* ............. ANNEX 14: FRR Sensitivity Analysis Graph......................... ANNEX 15: ERR Sensitivity Analysis Graph ........................ ANNEX 16: FRR SensitivityAnalysis............................... ANNEX 17: ERR Sensitivity Analysis............................... ANNEX 18: Related Documents and Data Available in the Project File......................................... MAP IBRD No. 14429R4: - Vuelta Grande Gas Recycling Project - Major Oil and Gas fields This report was written by Messrs. Bertelsmeier (Mission Leader), Farhandi, Toktar and Montes (IBRD) and Messrs. Kassatly and Schlabach (Consultants); Messrs. Stoddart, Voltaire (IBRD) and Tromel (Consultant) contributed to earlier analyses incorporated in the report.  BOLIVIA VUELTA GRANDE GAS RECYCLING PROJECT I. INTRODUCTION 1.1 The Government of Bolivia and Yacimientos Petroliferos Fiscales Bolivianos (YPFB), the national oil company, have requeated an IDA credit of US$15.0 million to heip finance the Vuelta Grande Gas Recycling Project. The Project fits into the strategy developed under the Gas and Oil Engineering Project (Credit S-25-BO) and would increase Bolivia's production and exports of hydrocarbons. 1.2 The proposed project would help develop the Vuelta Grande gas con- densate field which would supply about one quarter of Bolivia's requirements of petroleum products. In April 1986 depressed prices of US$10 per barrel of crude oil, peak production of Vuelta Grande would be valued at about US$35 million per year. Under the proposed project, YPFB would acquire technology to develop other gas condensate fields in Bolivia. I I. THE ENERGY SECTOR A. Overall Energy Position Resources 2.1 Bolivia is a net energy exporter and relative to its needs has a large energy resource base. Proven natural gas reserves in 1985 were about 4.1 trillion cubic feet (TCF), equivalent to over 40 years of production at the present level. Prover reserves of liquid hydrocarbons (crude oil and con- densates) are limited by comparison, amounting to about 154 million barrels, equivalent to about 17 years of present production. Ultimate reserves are likely to be significantly larger, particularly for natural gas, since nearly half of the national territory has hydrocarbon potential but is only partially explored. Bolivia has abundant hydroelectric potential of which 287 MW have been developed. Reserves of coal and peat are small and their use is limited to localized residential consumption. Fuelwood resources are considerable with forests covering about half of the country, but mainly in the scarcely populated tropical lowlands. There are indications of geothermal resources in the western and central Cordilleras (although rather distant from consumption centers) and the first three exploration wells are to he drilled with assistance from Italy and UNDP. There is limited potential for solar energy in the Altiplano and wind energy in the Chaco, virtually unutilized at present.  Production and Consumption 2.2 In 1984 net primary energy production reached 4.4 million tons of oil equivalent (toe), of which natural gas accounted for 48.2%, crude oil and condensate for 24.7, fuelwood for 20.7%, hydropower for 4.1% and agricultural wastes (bagasse) for 2.3%. Gross power generation amounted to 1,646 GWh, 72.3% from hydro and 27.7% from thermal. 82% of the net output of natural gas was exported to Argentina. Energy consumption is low at 0.4 toe per capita per annum (Argentina 1.8, Brazil 0.95, Peru 0.6); end-use breakdown is as follows: residential, commercial and government 53.9%, transport 26.5%, mining and manufacturing 19.6%. Government Institutions 2.3 The Ministry of Energy and Hydrocarbons (Ministerio de Energia e Hidrocarburos, MEH) is the Government institution respolsible for the energy sector. MEH supervises the natioral oil company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) and the private operators (paras. 2.10) as well as the power utilities, i.e. the Government-owned Empresa Nacional de Electricidad (ENDE) and the private Bolivian Power Company. MEH also is responsible for renewable energy (except for wood and charcoal which are the responsibility of the Ministry of Agriculture) and for energy planning. Electricity tariffs and petroleum product prices are decided upon by MEH, normally after consultation in Cabinet. Energy Assessment 2.4 The Bank carried out an energy assessment of Bolivia in 1982/83 (Report 4213-BO "Bolivia: Issues and Options in the Energy Sector", April 1983). The energy assessment recommended: gi) efforts to identify new markets for Bolivia's natural gas; (ii) action to address the fuelwootd shortage in the Altiplano; (iii) measures to avert the threat of an oil deficit including projects to increase supply through development of already discovered condensate fields and enhanced oil recovery, and investments to substitute gas for oil; (iv) postponement of hydropower projects in favor of gas turbines; (v) energy demand management measures, including increasing petroleum product prices to international levels and adjusting power tariffs to allow ENDE to earn the 9% rate of return required in the Electricity Code; (vi) review of petroleum sector policy, including Hydrocarbons Law, to attract more private sector participation; (vii) reversing the loss of YPFB's professional staff through review of corporate and personnel policies, including a reform of the salary structure; and (viii) strengthening the capability of Ministry of Energy and Hydrocarbons to formulate energy policies and coordinate sector activities. Despite the qerious economic, social and political problems which have disrupted Government management over the past few years, the Bolivian  - 3 - authorities have taken steps to address the issues outlined above. Iden- tification of new gas markets, development of recently discovered condensate fields and enhanced oil recovery have been top priorities of YPFB and the Government. No new hydropower projects have been started and Government has begun to consider measures to address the fuelwood shortage. The new admin- istration took steps in September 1985 to bring energy prices to levels encouraging both production and conservation, and more recently asked for Bank assistance to review the contractual and legal framework for private sector activities. The Association is assisting Government under financing obtained from UNDP in the reorganization and streamlining of YPFB and in the review of petroleum legislation. Under the proposed project, YPFB would carry out a study to review personnel policies and its salary structure as a basis for cutting losses of skilled staff. Finally, MEH established an initial planning group to set up an energy planning department within MEH with assistance from the Latin American Energy Organization (OLADh; and the European Community (EC) and is committed to develop a national energy plan by the end of 1.986. B. Hydrocarbon Sector Overview 2.5 Boli-ia's largest energy resource - natural gas - faces limited domestic and foreign demand. Oil resources, on the other hand, are modest and production has been declining since 1973, as new discoveries have not kept pace with depletion. As a result, as domestic domand increased, petroleum exports declined rapidly and came to a halt in 1983. Under these circumstances, the Government's objectives have been to increase exploration for and production of oil by such measures as attracting private oil companies who have partly compensated for the decline of YPFB's production. The Government has further been searching for new foreign markets for Bolivia' s gas, particularly since the present gas export agreement with Argentina is scheduled to terminate in 1992, and for additional domestic uses of gas by substituting for petroleum fuels that could be exported. The main potential market for Bolivia's gas is Brazil. With Brazil's cooperation, basic engineering design has been completed in 1982 fcr a possible gas pipeline from Bolivia's Santa Cruz region to the large market in Brazil's Sao Paulo region, but no decision has been taken to proceed further as Brazil is still studying how to develop this market and how to best supply it, i.e. from domestic gas fields, Bolivia or Argentina. The Government also has been promoting energy conservation through recent pricing measures. Hydrocarbon Exploration 2.6 Bolivia covers about one million km2 of which 41% are sedimentary basins. Although three of these basins have the pre-requisites for petroleum generation -- the Beni, the Santa Cruz-Chaco basin, and the Altiplano -- oil or gas have so far been found only in the Santa Cruz-Chaco basin. Petroleum exploration in Bolivia started in 1918, carried out mostly by large inter- national companies, and led to the first discovery in 1927 in Camiri. A total of 336 exploration wells were drilled in Bolivia through 1984 with a discovery rate per exploration well of 1.3 million barrels of oil and condensate and 17.2 billion cubic feet of gas (176 wells were drilled from 1969 to 1985; para. 3.1).  - 4 - 2.7 YPPB made in March 1982 the first oil discoveries in many years; one in Humberto Suarez and another in Yapacani. In 1983, YPFB discovered a small oil field close to Santa Cruz and in 1985 drilled an oil discovery well in the Cascabel prospect which remains to be appraised. These recent discoveries offer favorable prospects for additional oil production over the next 3-5 years of tne order of about several thousand barrels daily (BD) but in the long term, unless new fields are fouind, they will only slow down the decline in liquids production resulting from the fact that many of Bolivia's fields are past their peak. To stimulate exploration, Government, with Bank Group assistance, is reviewing the le al framework for private sector activities and intends to soon promote areas for exploration by private sector companies. The Bank Group is also assisting YPFB to establish the feasibility of promoting development of recent discoveries. This would be financed under a PPF approved in March 1986 (para. 2.33). Estimated reserves and production projections are given for oil in Annex 1 and for gas in Annex 2. Bolivia's oil and gas fields are shown on Map IBRD No 14429R4. A total of 130,326 in2 have been contracted for exploration, 66% to YPFB and the rest to private sector companies. Production 2.8 Background. Bolivia is more gas than oil-prone, and the largest liquids producer is a gas condensate field. The sector developed rapidly in the 1960s and oil and condensate output continued to rise until it peaked in 1973 at 47,400 BD and declined steadily to 25,500 SD by 1985 as a result of the depletion of the various fields and because no new fields came on stream due to a lack of investments reflecting the impact of the foreign exchange shortage. The 1985 production of 25,500 BD includes 4,000 BD of LPG from gas production. Oil exports, which reached 32,500 BD in 1973, were reduced to spot sales of naphtha and gasoline in 1980 and ceased altogether soon there- after. The 1985 price adjustments (para 2.23) caused a small liquids surplus, which is exported. The decline in oil production highlights the need to increase efforts in exploration and development, which requires a larger role for the private sector. At present, about 75% of the total liquids are produced from condensate, mostly by stripping gas of its liquid content at the surface. The dry gas is then sold or reinjected to maintain reservoir pressure and for storage for future sale when a market is developed. Gross gas production in 1985 reached 450 MMCFD and about 165 MMCFD was reinjected. In 1985, YPFB accounted for about 72% of Bolivia's oil (Annex 1) and 65% of its gas (Annex 2). 2.9 Hydrocarbon Law and Private Sector Role. In order to encourage petroleum exploration to offset the continuous decrease in reserves, the Government is reviewing the 1972 petroleum law and the contractual framework for oil operations to attract foreign oil companies to provide risk investment in association with YPFB. At Government request, the Association is assisting in this review. The law sets the principle of State sovereignty over petroleum resources and assigns all direct responsibilities to YPFB which may enter into operation contracts with private oil companies to carry out exploration and production activities. Contracts are of the production sharing type and may not exceed 30 years, including up to 7 years exploration. The contractor receives in case of discovery 40% to 50% of  - 5 - production, and is guaranteed the right to retain foreign income from sales of hydrocarbons and to convert local income into foreign currency. However, MEH authorizes exports of hydrocarbons only after internal demand has been satisfied. Taxes are paid by YPFB. The price paid to the private sector by YPFB is pegged to the Government Selling Price of Arab Light crude, the most widely used benchmark for oil .rade. Since early 1986, the private companies have been selling their share of produced liquids on the world market at prevailing international prices, after recent pricing measures led to a small oil surplus which is exported (paras. 2.22-2.26). For gas, the private contractors are paid the same price as YPFB, i.e. UTS$3.70 per MCF, less a transportation charge to YABOG, depending on the distance from the field to the border. This gas price of US$3.70/MCF is equivalent to about US$20 per barrel of fuel oil which is above April 1986 world market prices, reflecting the fact that export prices are negotiated for one-year periods and that payment is partly in countertrade. 2.10 Besides YPFB, .wo private groups presently produce oil in Bolivia and a third is exploring: Occidental Petroleum Corporation (US) and/the Tesoro Bolivia Group (consisting of Tesoro Bolivia, Canadian Superior - and Zapata Exploration) sell all their oil and gas output to YPFB. Shell acquired an exploration permit in 1982 and is exploring the Beni basin. Recently, Shell has applied co the Government to relinquish 50% of their present acreage which is about one million acres, and to acquire certain other areas in the Beni region. The share of the private sector in Bolivia's gas and oil sales has been growing between 1979 to 1985 from 11% to 28% for crude oil and from 25% to 35% for natural gas (para. 2.19). 2.11 In 1978 YPFB agreed with the private operators that they would supply 86.5 MMCFD of the total 220 MMCFD of gas exported to Argentina as an incentive for the private operators to bring on stream the gas fields of Tita and La Vertiente, which produce large volumes of gas along with the liquids. Following interruption of payments for gas delivered to Argentina in 1982 and subsequent foreign exchange shortages in both countries, Bolivia began in turn to fall behind in its payments for 1982 and 1983 gas deliveries (para. 2.16) from Tesoro and Occidental. Bolivia made some payments to the oil companies, and in order to further reduce the government's arrears to them, permitted them to export condensate and to purchase oil field equipment from Argentina under the bilateral countertrade agreement for compensationi of Bolivia's gas exports to Argentina. Tesoro and Occidental continued to produce and meet commitments for exports and the domestic market. In December 1985, Government agreed with the private operators on a schedule of payments including payments in kind to amortize the overdues for gas received which at one point had reached a peak of about US$100 million. Talks are being scheduled between the private sector and the Government to review progress in implementing this agreement. Tesoro is considering the development of several prospects in the Chaco with financial assistance from IFC. Several other international oil companies recently have expressed interest in becoming active in Bolivia. Because a more active private sector would be important for Bolivia to sustain I/ Acquired in 1985 by Mobil Oil Corporation.  exploration and development in the hydrocarbon sector, assurances were obtained that the annual consultations between Government and the Association on YPFB's investment program (para. 3.23) would also focus on measures to promote private sector activity in exploration and development (Section 3.05, Draft Project Agreement). The Government has accepted to modify legislation to include joint ventures in development operations. This would be an added incentive for companies to be involved in exploration. Key to increased private sector interest in Bolivia have been first, the positive open-door policy of Government towards the private sector, and second, the re-appearance of a liquids surplus which is exported by the private companies. Domestic Demand 2.12 Domestic demand for petroleum products in 1985 was about 23,600 BD. Demand grew during 1974-78 at an average 11% p.a., but at only 3.5% p.a. in 1979-80 and has stagnated since then, even declining somewhat in 1984 and 1985. On'"- LPG demand continues to grow, substituting for kerosene in the process. petroleum products consumption, gasoline now accounts for 34%; diesel n LPG 22Z: fuel oil 8%; kerosene 8%; and jet fuel 7%. 2.13 Projected increases in domestic petroleum consumption would largely depend on the strength of the economic recovery in Bolivia following several years of severe recession. Since there are major uncertainties as to when a recovery will take place and how strong it will be, it is presently anti- cipated that a modest recovery might begin in 1987 at a rate of 3% and that the income elasticity of demand for petroleum products would decrease from the 2.0 recorded in the 1970's to 1.5 as a result of moving domestic petroleum prices to international levels and the stronger incentives to encourage energy conservation. The Government's pricing policy has already reduced unautho- rized exports of hydrocarbons thereby cutting apparent demand in 1986 below 1985 levels (para 2.24). Finally, increasing supply of natural gas and improved infrastructure for its transportation (para 2.14) should help bring about the substitution of a total of about 2,000 BD of petroleum products by 1990. Under these assumptions, projected domestic demand for petroleum products by around 1990 would be about 23,000 BD (excluding gas), reflecting increased substitution of gas for petroleum products. 2.14 Domestic consumption of natural gas is still small despite recently high relative growth rates (para. 2.19) and in 1985 was about 30 MMCFD (not including YPFB's internal consumption), but the scheduled completion of the IDB financed gas pipeline from Santa Cruz to Oruro and La Paz in 1987 will open new markets and stimulate industrial consumption of natural gas and replace industrial petroleum fuels, mainly diesel and fuel oil. Gross gas production is largely determined by the required liquids output and excess gas is then reinjected (Annex 2). Hydrocarbon Exports and Imports 2.15 The composition of hydrocarbon exports has sh.ifted in the past ten years from crude oil to natural gas. Exports of crude oil stopped in 1980 and of gas?Oine and naphtha (mainly to Brazil and Chile) stopped in early 1983. - Exports to Argentina in 1985 accounted for 99% of Bolivia's hydro-  -7- carbon export sales revenues and for about 60% of Bolivia's total exports. Petroleum product imports are small, consisting mainly of lubrizants and aviation gasoline. Bolivia, moreover, lacks adequate infrastructure for the expanded imports, which in the absence of this project, would become necessary (para. 2.21). 2.16 Gas exports flow to the Argentine border in a gas pipeline financed with a 1971 Bank loan (635-BO) and complementary credits under an "enclave project" arrangement. Gas del Estado of Argentina established a Lenders Trust and a trust account bearing the proceeds of the gas export sales. The proceeds were first partly applied to the compensation for the nationalization of the former Gulf Oil Company fields in July 1979 (para. 3.1). After this compensation was completed, the proceeds were mainly used for debt service on the Bank and related loans and operational requirements of YPFB's gas pipeline company (YABOG) and its Santa Cruz Division. The pipeline project was completed ahead of schedule and below initial cost estimates. Bolivia began exporting 150 MMCFD of natural gas to Argentina in 1972 under a 20-year take- or-pay contract and has been operating without incident. The volume was increased in 1980 to 220 MMCFD. Gas export revenues exceed original expectations and export prices increased from US$0.28/MCF in 1972 to US$4.23/MCF in 1985. Due to the fall of petroleum prices in early 1986, the gas export price was reduced in May 1986 to US$3.70/MCF. The Lenders Trust Agreement worked well for 10 years until 1982 when Argentina developed severe foreign exchange problems and Gas del Estado began to fall behind on its payments for Bolivian gas, although interest and principal payments for debt service to the Trust Fund were always met. In 1984, the Governments of Bolivia and Argentina agreed to settle the arrears for the 1982 and 1983 gas deliveries during 1984 through payments both in cash and in kind and simultaneously to reduce Bolivia's arrears to Argentina on the latter's past trade and other Government credits. Argentina's arrears for gas delivered in 1982-84 were fully settled by early 1985. 2.17 YPFB's plans include the aforemetitioned construction of a gas pipe- line to Brazil with a final capacity of 400 MMCFD which could start operations in the early 1990's. Basic engineering for the pipeline has been completed, but the two countries have yet to conclude a gas sales agreement and project implementation arrangements, mainly because Brazil has not yet decided from which sources to supply the Sao Paulo market (para. 2.5). In addition, the recent drop in oil prices has affected the economics of the proposed line. Therefore, the project has not been included in the demand and financial projections. The Bolivian Government is now attempting to reactivate this project, however. 2/ Unauthorized product exports continued due to higher prices in neighboring countries but domestic price adjustments in October 1985 stopped these product movements and led to the reappearance of a small surplus which is exported.  -8- 2.18 Since 1979 YPFB has exported LPC to Brazil via the Santa Cruz-Corumba railroad under a long term sales agreement which is 3cheduled to be extended this year. The sales contract calls for LPG (35% propane, 65% butane) deliveries of 18,000 metric tons per year (tpy) but Petrobras has purchased larger quantities, taking at times all the LPG production that YPFB could export. In 1983, Petrobras imported 37,000 tons of LPG from Bolivia, but trade has declined since because of decreasing surpluses of LPG in Bolivia. LPG prices FOB Corumba per ton increased from US$155 in 1976 to US$255 in October 1985. Petrobras has requested to renegotiate this price because of the fall in international prices in early 1986. In February 1984, the Covern- ments of Bolivia and Brazil agreed to increase LPG sales up to 100,000 tpy, but growing domestic demand in Bolivia and delays in the development of gas fields are expected to keep exports below that level. However, increases in exportable surpluses of LPG are expected as a result of the proposed project and by mid-1987 YPFB would submit proposals to the Association for improving LPG transport facilities to export additional LPG volumes to Brazil. Demand/Supply Balance 2.19 A summary of production, exports and domestic sales of hydrocarbons in Bolivia is given below:  BOL I VIA Production and Sales of Hydrocarbons '- 1973 1977 1981 1983 1984 1985 1990