The Bolivian Gas War (Spanish: Guerra del Gas) or Bolivian gas conflict was a social confrontation in Bolivia reaching its peak in 2003, centering on the exploitation of the country's vast natural gas reserves. The expression can be extended to refer to the general conflict in Bolivia over the exploitation of gas resources, thus including the 2005 protests and the election of Evo Morales as president. Before these protests, Bolivia had seen a series of similar earlier protests during the Cochabamba protests of 2000, which were against the privatization of the municipal water supply.
The conflict had its roots in grievances over the government's economic policies concerning natural gas, as well as coca eradication policies, corruption and violent military responses against strikes.
The "Bolivian gas war" thus came to a head in October 2003, leading to the resignation of President Gonzalo Sánchez de Lozada (aka "Goni"). Strikes and road blocks mounted by indigenous and labour groups (including the COB trade union) brought the country to a standstill. Violent suppression by the Bolivian armed forces left some 60 people dead in October 2003, mostly inhabitants of El Alto, located on the Altiplano above the seat of government La Paz.
The governing coalition disintegrated forcing Goni to resign and leave the country on October 18, 2003. He was succeeded by the vice president, Carlos Mesa, who put the gas issue to a referendum on July 18, 2004. In May 2005, under duress from protesters, the Bolivian congress enacted a new hydrocarbons law, increasing the state's royalties from natural gas exploitation. However, protesters, who included Evo Morales and Felipe Quispe, demanded full nationalization of hydrocarbon resources, and the increased participation of Bolivia's indigenous majority, mainly composed of Aymaras and Quechuas, in the political life of the country. On June 6, 2005, Mesa was forced to resign as tens of thousands of protesters caused daily blockades to La Paz from the rest of the country. Morales' election at the end of 2005 was met with enthusiasm by the social movements, because he was, as the leader of left-wing MAS, one of the staunchest opponents to the exportation of the gas without corresponding industrialization in Bolivia. On May 1, 2006, President Morales signed a decree stating that all gas reserves were to be nationalized: "the state recovers ownership, possession and total and absolute control" of hydrocarbons. The 2006 announcement was met by applause on La Paz's main plaza, where Vice President Alvaro Garcia told the crowd that the government's energy-related revenue would jump US$320 million to US$780 million in 2007, continuing a trend where revenues had expanded nearly sixfold between 2002 and 2006.
The central issue was Bolivia's large natural gas reserves and the prospect for their future sale and use. The Bolivian gas reserves are the second largest in South America after Venezuela, and exploration after the privatization of the national oil company YPFB showed that proven natural gas reserves were 600% higher than previously known. The cash-poor, state-owned company could not afford the exploration costs. These reserves mainly are located in the southeastern Tarija Department, which contains 85% of gas and petrol reserves. According to the United States Department of Energy, another 10.6% is located within the department of Santa Cruz and 2.5% in the Cochabamba Department. After further exploration from 1996 to 2002, the estimated size of the probable gas reserves was calculated to be 12.5 times larger, passing from 4.24×10^12 cu ft (120 km3) to 52.3×10^12 cu ft (1,480 km3). This number has declined somewhat to 48×10^12 cu ft (1,400 km3) probable reserves. The proven reserves are 26.7×10^12 cu ft (760 km3). With the declining importance of tin mines, those reserves accounted for the majority of foreign investment in Bolivia.
The price which Bolivia is paid for its natural gas is roughly US$3.25 per million British thermal units ($11.1/MWh) to Brazil and $3.18 per million BTU to Argentina. Other sources state that Brazil pays between $3.15 and $3.60 per million BTU, not including $1.50 per million BTU in Petrobras extraction and transportation costs. As a comparison, the price of gas in the US as a whole in 2006 varied between US$5.85 and $7.90 per million British thermal units ($20.0 and $27.0/MWh), although some years earlier the price of natural gas spiked at $14 per million BTU in California due to lack of pipeline capacity to and within California as well as due to electricity outages. While according to Le Monde, Brazil and Argentina pay US$2 per thousand cubic meter of gas, which costs from $12 to $15 in California.
In 1994, a contract with Brazil was passed, two years before 1996's privatization of the 70-year-old, state-owned Yacimientos Petroliferos Fiscales de Bolivia (YPFB). The construction of the Bolivia-Brazil gas pipeline cost US$2.2 billion.
A consortium called Pacific LNG was formed to exploit the newly discovered reserves. The consortium comprised the British companies BG Group and BP, and Spain's Repsol YPF. Repsol is one of three companies that dominate the gas sector in Bolivia, along with Petrobras and TotalEnergies. A plan costing US$6 billion was drawn to build a pipeline to the Pacific coast, where the gas would be processed and liquefied before being shipped to Mexico and the United States (Baja California and California), through a Chilean port, for example Iquique. The 2003 Lozada deal was opposed heavily by Bolivian society, in part because of nationalism (Bolivia feels resentment after the territorial losses of the War of the Pacific in the late 19th century, which deprived it of the Litoral province and hence access to the sea).
Government ministers hoped to use the gas profits to bolster the sagging Bolivian economy and claimed the money would be invested exclusively in health and education. Opponents argued that under the current law, the exportation of the gas as a raw material would give Bolivia only 18% of the future profits, or US$40 million to US$70 million per year. They further argued that exporting the gas so cheaply would be the latest case of foreign exploitation of Bolivia's natural resources, starting with its silver and gold from the 17th century. They demanded that a plant be built in Bolivia to process the gas and that domestic consumption had to be met before export. As Le Monde puts it, "two reasons plead for the industrial exploitation of the gas, which the multinational companies now have the capacities of doing. The first is related to the necessity of satisfying the Bolivians' energy needs. The second demonstrates the interest of exporting a more profitable product rather than selling raw material". According to the French newspaper, only La Paz, El Alto, Sucre, Potosí, Camiri and Santa Cruz are now connected to the gas network; making an interior network which would reach all Bolivians would cost $1.5 billion, notwithstanding a central gas pipeline to link the various regions together. According to Carlos Miranda, an independent expert quoted by Le Monde, the best industrialisation project is the petrochemical complex proposed by the Brazilian Braskem firm, which would create 40 000 direct or indirect jobs and cost $1.4 billion. This figure is equivalent to the amount so far invested by Repsol, TotalEnergies and Petrobras.
The eastern departments of Santa Cruz, Beni, Tarija, and Pando recently had been mobilizing in favor of autonomy. An important issue was opposition to the seizure of resources though nationalization. Community leaders are supported by the Comite Pro Santa Cruz, local co-ops, and by business organizations such as cattle ranchers and farmers. A strike against the new constitution was recently held which was observed in Santa Cruz, Beni, Tarija, and Pando. Tensions have been raised by the cultural and philosophical rift exposed by the push for a new constitution. As a basis for a new constitution, the western, Altiplano-based MAS party envisions a "council of indigenous peoples" along with a curtailment of private ownership, while Santa Cruz looks to western culture and capitalism.