Andean Group - June 2014 (ISSN 1741-4466)

Foreign direct investment (FDI) inflows in the first quarter of 2014 were valued at US$469.1m, up 37.9% on the US$340m registered in the same period of 2013, according to the central bank. The sector attracting most investment was hydrocarbons (US$365.9m, up from US$244.8m in 2013), followed by mining (US$83.8m up from US$43.1m).

According to the most recent report on FDI by the United Nations (UN) Economic Commission for Latin America & the Caribbean (Eclac), released in May 2014, total FDI in Bolivia reached a record US$2.03bn in 2013, up 35% on 2012, of which the bulk was destined for the hydrocarbons sector. The report noted that “FDI in other sectors has declined over the past few years as a result of nationalizations of foreign subsidiaries, especially in mining and electricity services”. The report also highlighted that “Petrobras of Brazil has been the primary partner of the State-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivia (YPFB), winning a bid that is estimated to require an investment of more than US$ 800 million.”

Other significant partners mentioned include Spain’s Repsol and a consortium comprising Russia’s Gazprom and Total of France. Total has signed an hydrocarbons exploration contract worth US$130m, while Repsol spent a total of US$640m, US$373m of it during 2013, to expand its natural gas processing plant by 60%. Other Spanish companies are cooperating with YPFB in separate gas liquefaction plants, such as Tecnicas Reunidas in Gran Chaco and Sener Ingeniería and Ros Roca Indox Cryo Energy in Santa Cruz. Samsung (South Korea) is spending US$843m on an entire petrochemical complex centred around a fertilizer plant. As regards future significant investments, the Eclac report notes that the Morales government is seeking to drum up interest in its Mutún iron ore deposit, located in the Santa Cruz region and thought to be among the richest in the world. The project has been held up since a US$2.1bn contract awarded to India’s Jindal Steel & Power to develop 50% of the mine was cancelled in July 2012.