Chile and Peru are gatekeepers for Bolivia's export ambitions.(political disputes inhibit development of gas industry in Bolivia)(Brief Article)

LA PAZ -- More than a century after the war that cost Bolivia its access to the sea, Chile and Peru stand in the way of Bolivian aspirations to become a major supplier of energy to the Pacific Basin.

Until 1884, Bolivia was a seafaring nation with a fishing industry and navy. However, a dispute with Chile over nitrate deposits in the Atacama Desert led to the disastrous 1879-1884 War of the Pacific, which left Bolivia landlocked.

The treaty ending the war granted Bolivia access the Chilean port of Arica via road and railway. These access rights later were expanded to include a pipeline that carries fuels and crude oil.

But these access rights give Chile a virtual stranglehold over Bolivian trade except overland exports to Argentina and natural gas sales via a new pipeline to Brazil.

This lingering dispute stands in the way of efforts to exploit Bolivia's burgeoning natural gas reserves by developing new export-oriented petro-chemical or natural gas export projects.

Bolivia's natural gas reserves have soared in recent years. In 1998, the country had proven natural gas reserves of 6.6 trillion cubic feet (Tcf), not enough to fulfill a 20-year sales contract with Brazil for 7.2 Tcf of gas. But an exploration binge by foreign oil companies has boosted the total to more than 50 Tcf now and it appears likely additional efforts will lift the tally to more than 60 Tcf soon. While domestic gas consumption is growing, Bolivia's small population and minuscule industrial base means that exports are the only viable option for Bolivia to exploit its large gas reserves.

Exports to Brazil, which started nearly two years ago, have been disappointing. Demand has been soft because government and private investors failed to build new gas-fired power plants as planned. Brazilian officials recently expressed interest in increasing purchases to 9.4 Tcf over the next two decades as new plants are built, but even if sales ultimately were to double or triple, this would still leave a substantial amount of gas available for other projects.