Oil & Gas 2026 Comparisons

Under the Bolivian Constitution, the Bolivian people hold exclusive ownership over all natural resources, including hydrocarbons. This ownership is inalienable and not subject to any statute of limitations. The Bolivian State, acting as the representative of the people, exercises this ownership and holds a constitutional monopoly over the commercialisation of such resources. Accordingly, any income derived from their commercialisation accrues to the State.

As a result, any contract, agreement, or arrangement that, whether directly or indirectly, expressly or tacitly, contravenes these constitutional provisions is null and void. The parties involved may also be subject to severe legal consequences, including being criminally prosecuted for treason.

Bolivian law does not recognise shared ownership of petroleum resources by provincial or local governments. However, such entities are entitled to participate in the economic benefits derived from their commercialisation.

The following three entities are the main Bolivian State agencies involved in the regulation of hydrocarbon activity in Bolivia.

Ministry of Hydrocarbons and Energy

The Ministry of Hydrocarbons and Energy (Ministerio de Hidrocarburos y Energías – MHE) is the principal authority responsible for Bolivia’s hydrocarbon sector. It supervises, controls and audits the full value chain, including exploration, production, transportation, storage, commercialisation, refining, industrialisation and natural gas distribution by networks.

The MHE establishes pricing policies for the domestic market and governs the export of hydrocarbon surpluses. It also formulates strategies to guarantee domestic supply and secure universal access to domiciliary gas services.

The MHE develops the socio-environmental regulatory framework applicable to the sector, ensures compliance with governing legal provisions, and resolves hierarchical appeals against ANH resolutions.

MHE’s authority is based on Law No 3058 (the “Hydrocarbons Law”) dated 17 May 2006; its regulation; Supreme Decree No 4393, dated 13 November 2020; as well as regulations specifically enacted for certain activities of the industry.

National Hydrocarbons Agency

The National Hydrocarbons Agency (Agencia Nacional de Hidrocarburos – ANH) is a decentralised public institution under the MHE, responsible for regulating, controlling, supervising and auditing downstream hydrocarbon activities. It oversees refining, storage, transportation, commercialisation, industrialisation and natural gas distribution, ensuring operators comply with the prevailing legal and technical framework.

The ANH grants the licences, authorisations and registrations required to operate within the sector and maintains the registry of operators and service stations. It safeguards the reliable supply of fuels and LPG to the domestic market, monitors pricing compliance and oversees product quality.

The ANH applies administrative sanctions and resolves matters through administrative resolutions, including revocatory appeals, subject to hierarchical review by the MHE.

The ANH was created by Administrative Resolution 474/2009, dated 7 May 2009, and its specific attributions are determined by regulations enacted for each specific activity.

Bolivian State Petroleum Company

The Bolivian State Petroleum Company (Yacimientos Petrolíferos Fiscales Bolivianos –YPFB) is the State-owned corporate entity that executes hydrocarbon production chain activities on behalf of the Bolivian State. Under the policy direction of the MHE, it conducts exploration, exploitation, refining, storage, transportation, commercialisation, industrialisation and distribution of hydrocarbons and their derivative products.

The YPFB’s by-laws were enacted by Supreme Decree No 28324 (as amended), and its attributions are based on the Bolivian Constitution, Hydrocarbons Law and sector-specific regulation.

Bolivia’s national oil and gas company is the YPFB, also referred to as the “YPFB Corporation” because it holds equity interests in the State-owned companies operating across the oil and gas industry. The YPFB holds a majority participation in YPFB Chaco SA; YPFB Transporte SA; YPFB Refinación SA; YPFB Petroandina SAM; YPFB Andina SA; Empresa Engarrafadora de Gas – Flamagas SA; Gas TransBoliviano SA; Transredes Do Brasil Holdings Ltda; YPFB Logística SA; and YPFB Aviación.

The YPFB controls all midstream and downstream activities in Bolivia. Under the Constitution, it holds the exclusive right to conduct all hydrocarbon activities, including commercialisation. To carry out these activities, the YPFB may enter into service agreements with public, private or mixed companies, under which the service provider acts in the name of the YPFB.

The YPFB’s key powers include exercising ownership over all hydrocarbons on behalf of the State, entering into and managing upstream service agreements, and controlling exploration and exploitation activities. It is also responsible for managing gas supply agreements for external markets and negotiating the incorporation of public-private companies within Bolivia or abroad.

The principal oil and gas laws and regulations are as follows.

Bolivian Constitution

The Constitution expands State control over all oil and gas activities. The people of Bolivia hold exclusive ownership over all petroleum resources, and the YPFB is the only entity authorised to conduct and control hydrocarbon activities across the full value chain.

Private investors, whether local or foreign, are considered service providers acting on behalf of the YPFB. To access upstream rights, investors must enter into a service agreement with the YPFB or form a joint-stock company with the YPFB.

Investors are subject to Bolivian laws, jurisdiction and authorities, with international arbitration and diplomatic claims being prohibited in certain scenarios. Hydrocarbons may be exported only once domestic market requirements have been satisfied.

Hydrocarbons Law

The Hydrocarbons Law No 3058, dated 17 May 2005 (HL) resulted from a referendum aimed at modifying previous oil and gas regulations. Under the HL, the YPFB recovered exclusive ownership over petroleum resources on behalf of the Bolivian people, and upstream companies were required to increase the direct Government Take from 18% to 50% of gross income.

The HL created three new types of upstream production agreements: shared risk agreements; operation agreements; and association agreements. International arbitration was barred from any new upstream agreement.

Law for the Sustainable Development of the Hydrocarbons Sector

Under the Law for the Sustainable Development of the Hydrocarbons Sector (Law No 3740, dated 31 August 2007), the Bolivian State established the foundations for a new cost-recovery structure intended to allow upstream companies to enter into the new types of upstream production agreements.

Public Enterprises Law No 466

As a result of Bolivia’s nationalisation process (conducted between 2005 and 2019), flagship State companies such as the YPFB held controlling stakes in numerous private companies. In the absence of Public Enterprises Law No 466, dated 26 December 2013, those companies would have had to be transformed into public companies. However, Law No 466 creates a distinct type of company – neither private nor entirely public – that, despite being State-owned, can approach business decisions with greater flexibility. To date, however, State-owned companies have yet to complete their transition to public enterprises.

Investment Promotion Law for Exploration and Exploitation Activities in the Hydrocarbons Sector

Investment Promotion Law for Exploration and Exploitation Activities in the Hydrocarbons Sector, Law No 767, dated 11 December 2015 (IPL) was enacted in an effort to encourage further investment in the upstream sector. It was prompted by the plunge in oil prices from mid-2014 to early 2015 and by the perception that a 50% direct Government Take had become excessive under those circumstances. The IPL reduced the Government Take by creating indirect compensation for producers, subject to certain conditions being met.

Supreme Decrees

• Nationalization Decree “Héroes del Chaco”, No 28701, dated 1 May 2006 is aimed at compelling all upstream participants to “migrate” from a joint-venture contract structure to Operation Agreements, thereby allowing the YPFB to take effective control over the entire petroleum industry in Bolivia.
• Regulations on Reported, Approved, and Recoverable Costs, Supreme Decree No 3278, dated 9 August 2017, enabled Bolivia to signal its readiness to use legislation to unilaterally amend the cost-recovery annexes to the upstream contracts.
• Regulations on Sub-Contracts for Petroleum Operations, Supreme Decree No 3398, dated 20 November 2017, enabled Bolivia to establish more rigorous standards for sub-contracts, given that sub-contractors’ fees may be treated as recoverable costs.

To gain access to upstream rights, private investors must either enter into Service Agreements with the YPFB or form a joint-stock company with the YPFB. The Hydrocarbons Law provides for three types of upstream production agreements (shared risk agreements; operation agreements; and association agreements), but the 2009 Constitution superseded those provisions, and the production agreements have since fallen into disuse.

The following general principles govern service agreements. The companies that execute the contract act as “Titleholders” and provide services to the YPFB, which acts for and in the name of the Bolivian State. The investment risk is borne entirely by the Titleholders.

The parties may proceed to the exploitation phase only if the operation proves successful and the Titleholders make a commercially viable discovery. In the exploitation phase, the Titleholders may recover the costs incurred during exploration, plus a profit.

All hydrocarbons produced under a Service Agreement are owned by the YPFB, and the Titleholders may not sell or market them. The terms of sale – including price, buyer and destination – are determined exclusively by the YPFB. To enable the YPFB to take control of petroleum production, the parties also execute a “Delivery Agreement”.

For the purposes of upstream interests, the executive branch has divided Bolivia’s territory into several so-called “Contract Areas”. In principle, a Contract Area may be granted to a private investor only as a result of a proper competitive bidding process. As an exception to this rule, however, the executive branch has the right to “reserve” certain Contract Areas in favour of the YPFB.

These “reserved” Contract Areas may then be granted by the YPFB to any eligible investor without a competitive process. From 2007 to 2010, the Bolivian executive branch did in fact reserve all available Contract Areas in favour of the YPFB; as a result, any eligible investor wishing to conduct upstream petroleum activities in Bolivia must negotiate directly with the YPFB.

The MHE has enacted specific regulation (in the form of administrative resolutions) to regulate these direct negotiations. An “eligible” investor must demonstrate its financial and technical capacity, must not have defaulted on any previous agreement with the YPFB, and must not be a party to any arbitration proceeding against Bolivia.

The negotiation procedure consists of two distinct stages. In the first stage, the prospective investor enters into a “Study Agreement” with the YPFB, under which the investor agrees to conduct preliminary exploration and analysis activities in the relevant area within one year. Once the study has been concluded, the parties may consider whether to enter into a “Services Agreement”.

In the second stage, if the study is positive and the parties agree to enter into a Services Agreement, the process involves several steps. First, the form of the agreement is negotiated between the private party and the YPFB. Once agreed, it must be authorised by the Bolivian Congress through a law.

After congressional authorisation, the Services Agreement is executed between the parties and then submitted to Congress for a second approval. Once this second law is enacted, the agreement is delivered to a government notary for notarisation. A Services Agreement is valid, binding and enforceable only after this final step.

The mandatory Government Take for upstream operations can be divided into two main categories: (i) the Direct Tax on Hydrocarbons (Impuesto Directo a los Hidrocarburos – IDH), royalties, and participations; and (ii) additional contributions.

Direct taxes, royalties and participations are as follows:

• IDH – 32% of the gross value of natural gas and oil production sales;
• provincial (11%) and compensation (1%) royalties – 12% of the gross value of natural gas and oil production sales; and
• national treasury participation – 6% of the gross value of natural gas and oil production sales.

Additional contributions are as follows:

• Patents – companies are required to pay a patent to the YPFB during the exploration and exploitation periods for the exclusive use of the Contract Area. The YPFB pays the patents in advance to the Bolivian National Treasury on an annual basis, and companies are obliged to reimburse them. The rate of the patents depends on the exploration phase and on the area of land covered by the relevant Services Agreement.
• The YPFB additional participation – this is an additional, variable participation agreed between the YPFB and the Titleholder in the relevant Services Agreement. It is paid annually during the exploration and exploitation periods. It is relatively low during the exploration period and increases during the exploitation period. The rate is calculated based on tables agreed upon as an annex to the relevant Services Agreement.
• Additional contributions to regulators.
• Social programmes and compensation for indigenous communities near well sites, to be agreed upon with the relevant stakeholders.

Upstream operations are subject to corporate income tax (Impuesto sobre las Utilidades de las Empresas – IUE) at a rate of 25% on the taxable net income obtained at the end of the fiscal year. Such operations are also subject to value added tax (IVA) at a rate of 13% on sales, and to transactions tax (IT) at a rate of 3% on gross income. Whenever Bolivian-sourced income is paid, credited or remitted abroad, the corporate income tax – beneficiaries abroad (IUE-BE) must be withheld at a rate of 12.5%.

In principle, upstream activities may be carried out only by the YPFB. Companies that enter into Services Agreements with the YPFB are mere service providers. The YPFB has the right of first refusal (ROFR) to provide exploration or exploitation services to any upstream operator under any Services Agreement. The YPFB owns several drilling rigs and other related machinery, and it seeks to maximise its investment by exercising this ROFR. The YPFB has no other special rights at this time.

Local content requirements applicable to upstream operations are mandatory; both the Bolivian Investment Law (Law No 516) and the Bolivian Hydrocarbons Law (Law No 3058) include specific provisions in this regard. Services Agreements further develop these requirements, incorporating them as contractual obligations.

These requirements can be summarised as follows:

• local employment – Bolivian nationals must account for at least 85% of an upstream company’s total employees, and foreign nationals are limited to 15%; upstream companies must also prioritise the hiring of Bolivian nationals from communities near their operations;
• local goods, assets and services – the use of local goods and assets must be given preference, subject to quality standards and prices, and the use of local services must likewise be favoured; private investors must also aim to transfer cutting-edge technology, machinery and equipment to the YPFB, universities, and other technology institutes; and
• training programmes – upstream investors must establish internships and practical training structures for the YPFB personnel and university students.

To begin the Exploitation Phase (which includes development and production activities), Titleholders must declare a commercial discovery and then submit the relevant development plan to the YPFB. The YPFB has the right to amend, reject or approve the plan. The terms of the development plan are discussed and agreed upon within the Services Agreement through negotiations between the parties.

If the YPFB approves the development plan, Titleholders have 180 days to begin the corresponding development operations (this timeframe is negotiated by the YPFB, and Titleholders have sometimes agreed to reduce it considerably). Owing to their inherent characteristics, development plans may be modified by the parties during operations.

Titleholders have the right to defer the commencement of development operations for up to two years if certain conditions – such as market availability or transportation facilities – are not favourable.

If the YPFB denies approval of the development plan (which is extremely unlikely), Titleholders will have no right to appeal that decision.

Services Agreements contain specific clauses that govern the relationship between Titleholders and the YPFB, the most relevant of which address the following aspects.

Purpose

The purpose of the Services Agreement is the performance of exploration and exploitation operations by the Titleholders, within the Contract Area, at their sole risk and expense. To this end, the Titleholders will bear all costs and provide all personnel, technology, facilities, assets and capital necessary to perform the exploration and exploitation operations. The YPFB will not assume any risk or liability with respect to exploration and exploitation activities or the results thereof.

Term

The term of the Services Agreement is limited to 40 years. In principle, this term cannot be extended; however, new legislation on the subject provides that an extension may be negotiated under certain circumstances. Within the 40-year term, the agreement divides activities into two periods.

Exploration period

The exploration period is divided into three phases: Phase 1 (years 1–3), Phase 2 (years 4–5), and Phase 3 (years 6–7). At the conclusion of each phase, if no commercial discovery has been made, the Titleholders must return a percentage (or 100% at Phase 3) of the exploration area to the YPFB. Services Agreements generally grant seven years for exploration in “traditional areas” and nine years for “non-traditional areas”. Annual work programmes and budgets must be submitted to the YPFB. The work programmes must comply with minimum work obligations valued in “Work Units for Exploration” (UTE), with one UTE currently valued at USD6.631. A minimum of 1,200 UTEs must be carried out in each exploration phase. A bank bond or standby letter of credit must be provided to guarantee compliance.

Exploitation period

The Titleholder must notify the YPFB if it makes a commercial discovery, and the YPFB will receive the corresponding development plan for its consideration.

Parent Company Guarantee Letter

If the Titleholder fails to meet its obligations, the Titleholder’s parent company must assume them by means of a Guarantee Letter included as an Annex.

Payment to the Titleholder(s)

Any compensation is contingent upon the commercialisation of petroleum by the YPFB. After the 50% direct Government Take and other agreed payments to the YPFB, the Titleholder has the right to recover all recoverable costs and to make a profit.

Domestic Supply Requirements

Supply to the domestic market takes precedence over exports. Under Bolivian law, the price of natural gas for the domestic market cannot exceed 50% of the price for export markets.

Applicable Law and Dispute Resolution

All Services Agreements are subject to Bolivian law. Dispute resolution mechanisms include extraordinary meetings between technical personnel; expert determinations (for technical matters); and arbitration in Bolivia under the rules of the National Chamber of Commerce of La Paz.

Termination

Any non-defaulting party has the right to terminate the agreement upon an event of default. Events of default and cure periods are clearly detailed. If the agreement is terminated by the YPFB due to default, the Titleholder may face criminal charges.

Withdrawal

The Titleholder may withdraw at any time, provided that all obligations have been satisfied. Withdrawal immediately triggers abandonment obligations.

Abandonment

Beginning in the first year of exploitation, the Titleholder must establish an abandonment budget. Abandonment plans must commence at least 18 months prior to the abandonment date. The Titleholder will remain liable for any contingencies arising prior to abandonment.

As a matter of Bolivian law, a transfer of interest in upstream projects may be affected only by assigning the relevant Services Agreement to a new investor (a direct assignment) or by selling an equity participation in the Titleholder to a third party (an indirect assignment). This will, in turn, require the approval of the YPFB and the MHE, the execution of an assignment agreement among the assignor, the assignee and the assigned party, and, finally, the approval of Congress.

The YPFB is not bound to accept any assignment proposal and may simply reject it. It will, however, consider proposals in which the prospective newcomer demonstrates proper financial and economic competence.

A change of control over a private investor that is party to a Services Agreement is treated as an indirect assignment. A voluntary change of control must be approved by the YPFB beforehand, whereas an involuntary change of control must be notified to the YPFB almost immediately, and the YPFB will then have the right to reject it.

Any Services Agreement assignment made for consideration will generate a 3% Transactions Tax (Impuesto a las Transacciones – IT). Unless specifically limited under the assignment agreement, the assignor will remain jointly and severally liable with the assigned party vis-à-vis the YPFB.

The assigned party will need to provide proper guarantees before or upon execution of the assignment agreement, and all permits obtained by the assignor will need to be obtained by the assigned party. The entire assignment procedure may take between six and 18 months to complete.

There are no regulatory restrictions or production rate limits applicable to the Bolivian hydrocarbons sector. That said, it is worth noting that access to export markets will be granted only after domestic market consumption has been satisfied.

Under the Hydrocarbons Law (Law No 3058), midstream and downstream activities include refining and industrialisation, transportation and storage, commercialisation, and residential gas distribution. To conduct storage, refining and industrialisation activities, a company must obtain an administrative licence from the ANH. Transportation, storage and residential gas distribution are subject to administrative concessions.

Four years after Law No 3058, Bolivia enacted its new Constitution, which changed the country’s legal philosophy towards petroleum and foreign investment. Under the Constitution, only the YPFB can conduct petroleum sector activities, and industrialisation must be carried out by the YPFB through the Bolivian Hydrocarbon Industrialisation Company (Empresa Boliviana de Industrialización de Hidrocarburos – EBIH).

The YPFB may enter into associations or public-private company structures for refining, industrialisation, transportation and commercialisation activities. Concession structures are required to migrate to contractual structures.

Private investment in midstream and downstream activities can only be channelled through associations or joint equity companies with the YPFB, which must hold the majority equity participation. These joint equity companies are considered public enterprises and are subject to Public Enterprises Law No 466.

Given the four-year gap between the Hydrocarbons Law and the Constitution, some private companies still carry out refining and transportation activities. This structure cannot be replicated for future investment. Gas stations have also remained private, despite the government’s efforts to nationalise them.

Concessions and licences for downstream and midstream activities remain in effect for several reasons. The YPFB took control of all main transportation and refining facilities by acquiring private investors’ shares, and the operating companies that were nationalised were under concession and licence structures.

The YPFB was required to transform these companies into public enterprises but has failed to do so. After the 2009 Constitution, the YPFB also attempted to nationalise gas stations without success.

Concessions will no longer be issued, and licences (if any) will only be granted to joint equity companies in which the YPFB holds majority equity. There are profound discrepancies between the 2005 Hydrocarbons Law and the 2009 Constitution, and a new Hydrocarbons Law aligned with the Constitution is long overdue.

The heavily reduced private investment in the midstream and downstream sectors exists only as a historical residue of past legal structures. The YPFB effectively controls all companies operating in the sector, except for gas stations and other minor players. Private investment in these sectors is no longer possible until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

As discussed in 3.1 Forms of Private Investment: Midstream/Downstream, private investment in the midstream and downstream sectors is not currently possible in Bolivia and will remain so until new legislation is enacted.

Foreign investment rules relevant to investments in petroleum are included in three fundamental instruments: the Bolivian Constitution, the Bolivian Investment Law and the Bolivian Hydrocarbons Law.

The Constitution

Investments conducted by Bolivians have priority over foreign investments. Foreign investment is subject to Bolivian jurisdiction, laws and authorities, with no exemptions or preferential treatment permitted. Appealing to diplomatic claims is prohibited.

Investments in petroleum activities cannot be subject to international arbitration, meaning there is no option to implicate international law in disputes arising from such agreements. Investments in midstream and downstream activities are not expressly barred from international arbitration. Expropriation is permitted only upon a determination of public need or public interest and is always subject to prior and just compensation.

The Investment Law

The Investment Law distinguishes between national and foreign investment. Foreign investment can be channelled through contractual structures or private or mixed equity companies, in which the public participant must always hold majority capital.

Foreign investment must be registered before the Central Bank, channelled through the financial system, and must comply with all applicable transfer pricing, tax, customs, environmental and other local legislation. General and specific incentives are permitted and must be formally requested. Specific incentives may cover customs, tax or production stimulus, and are temporary, lasting from one to 20 years.

Investors have the right to remit royalties, returns, dividends or original capital in foreign exchange. A withholding tax of 12.5% applies to royalties, returns and profits, and an additional 2% processing fee must be paid to the Central Bank. Capital repatriation is not subject to withholding tax but is subject to the Central Bank’s processing fee.

The Hydrocarbons Law

Under the HL, the Bolivian State has pledged to guarantee current and future investments in the petroleum sector. Investors in petroleum industrialisation, gas transportation, home gas and national energy matrix diversification projects may be deemed eligible for incentives, including special treatment in tax, customs and the use of land. Investors in upstream projects are entitled to free currency exchange and free transferability rights.

There are no Bolivian oil-and-gas-specific sanctions currently in place that restrict investment in oil and gas assets in particular foreign jurisdictions, or conducting business in the oil and gas sector with foreign counterparties, governments or jurisdictions.

However, in practice, sanctions imposed by foreign governments may have an impact on local oil and gas operations in Bolivia when operators, shareholders, lenders, insurers, suppliers, technology providers or other relevant counterparties have a sufficient nexus with those foreign jurisdictions.

For example, sanctions imposed by the US government in respect of certain Russian oil and gas companies may be relevant to Bolivian operations involving entities headquartered in, owned by, controlled by, financed from, or otherwise connected with the United States or other sanctioning jurisdictions.

Accordingly, although Bolivia does not maintain a separate oil-and-gas sanctions regime of this nature, foreign sanctions compliance should be assessed on a case-by-case basis by reference to the nationality, ownership, control, financing, supply chain and contractual links of the relevant parties.

Bolivia has six main environment-related regulations applicable to upstream, midstream and downstream operations:

• Environmental Law No 1333, dated 27 April 1992 – this regulates the protection and conservation of the environment and natural resources, promoting sustainable development to improve quality of life.
• General Regulation of Protected Areas, dated 31 July 1997 – this regulates the administration of protected areas and establishes the relevant institutional and administrative framework.
• Forest Law No 1700, dated 12 July 1996 – this regulates the sustainable use of forests and forest lands and their protection.
• Hydrocarbons Law No 3058, dated 17 May 2005 – this regulates hydrocarbon activities in an environmentally sound manner.
• Environmental Regulation for the Hydrocarbons Sector – this was approved by Supreme Decree No 24335, dated 19 July 1996, and has been supplemented by several other decrees.
• Environmental Control and Prevention Regulation – this was approved by Supreme Decree No 24176, dated 8 December 1995, and has been supplemented by several other decrees.

The major regulatory bodies operate through a two-level mechanism. At the national level, the Department of the Environment and Water, including SENMA, and the Department of Hydrocarbons share oversight. At the provincial level, each provincial government exercises environmental jurisdiction through the Departmental Council for the Environment (Consejo Departamental de Medio Ambiente – CODEMA).

There are three main environmental licences: the Study of Environmental Impact Assessment (Estudio de evaluación de impacto ambiental – EEIA), the Environmental File (FA), and the Declaration of Environmental Impact (Declaración de impacto ambiental – DIA). Bolivia also requires a query to be carried out before the Peasant, Indigenous Communities and Original Peoples (PCIO) while the project is still at the negotiations phase.

Bolivia is a landlocked country. Therefore, offshore development is not feasible.

The decommissioning of petroleum activities must be approved in two stages: by the YPFB and by the Department of the Environment and Water. Environmental obligations require an annual Environmental Monitoring Report. In the abandonment of operations, the concluding report is called an Activities Finalization Report, which must be approved by the Department of the Environment and Water in co-ordination with the YPFB.

The whole process may take approximately 12 to 18 months. No decommissioning bond is required, since the Titleholder is legally required to create and maintain an abandonment trust fund from the first day of operations. The Titleholder is not freed from any liabilities, and all companies (including non-operators) are jointly and severally responsible for any environmental contingencies.

Bolivia is a signatory to the United Nations Framework Convention on Climate Change (ratified by Law No 1576 of 25 July 1994), the Kyoto Protocol (ratified by Law No 1988 of 22 July 1999) and the Paris Agreement (ratified by Law No 835 of 19 September 2016).

On 15 October 2012, Bolivia enacted Law No 300 – the Mother Earth Law. Climate change is mentioned at least 68 times therein, but the law does not provide for any specific prohibitions, limits or targets beyond broad statements on controlling, managing and adapting to climate change.

Local governments have no direct capacity to limit petroleum activities within their territory. However, the fact that they oversee the granting of certain environmental permits and that no petroleum activities can be conducted without them gives local governments some leverage over the implementation of said activities. In that sense, local governments could prevent the commencement or the continuation of a given petroleum activity.

Bolivia does not have a comprehensive, standalone energy transition law. However, several legal instruments address elements of energy transition, and significant reform is expected.

The Mother Earth Law

The Mother Earth Law (Law No 300, dated 15 October 2012) establishes broad policy orientations for energy, including the gradual shift of the energy matrix from non-renewable to renewable sources, the incremental incorporation of renewable energy into the National Interconnected System (Sistema Interconectado Nacional – SIN), and the development of plans and programmes for alternative renewable energy generation, prioritising solar, wind and micro-hydroelectric sources. While climate change is mentioned extensively throughout the law, it does not provide for specific prohibitions, limits, or measurable targets.

International Agreements

Bolivia is a signatory to the United Nations Framework Convention on Climate Change (ratified by Law No 1576 of 25 July 1994), the Kyoto Protocol (ratified by Law No 1988 of 22 July 1999), and the Paris Agreement (ratified by Law No 835 of 19 September 2016). These international commitments frame Bolivia’s climate policy, but implementing legislation with binding sector-specific targets remains limited.

Noteworthy Recent Policies

On the planning front, two noteworthy policy instruments were issued under the previous government of President Luis Arce. The Plan Eléctrico Referencial 2035, published in September 2025, set targets of 65% renewable electricity generation by 2029 and 75% by 2035, projecting a reduction in natural gas consumption for power generation from 5.4 MMm³/day in 2026 to 3.5 MMm³/day in 2035.

The Hoja de Ruta para la Producción y Uso de Hidrógeno Verde y de Bajas Emisiones en Bolivia (Green Hydrogen Roadmap), published in November 2024, establishes a long-term vision to 2050 for the production, domestic consumption and export of green hydrogen (H₂V). Both instruments were issued under the previous administration and may be subject to significant revisions under the current government of President Rodrigo Paz.

Upcoming Legislative Changes

On the legislative front, the current government has announced its intention to submit structural laws, including a proposed Green Energy Law addressing renewable energy development, biomass, electric vehicle migration and distribution infrastructure investments. The government has framed its approach not as an “energy transition” but as an “energy diversification”, emphasising that natural gas will continue to play a central role in Bolivia’s energy matrix, particularly given that royalties and the IDH are levied on gas production and not on renewable generation.

The impact on traditional energy development will be direct. Bolivia’s electricity generation is predominantly gas-based, with gas-fired plants accounting for approximately 66% of total generation in 2024. Any shift towards renewables would gradually reduce domestic gas consumption for power generation, potentially freeing volumes for export or other industrial uses – a significant factor given the country’s declining gas reserves.

Bolivia has no cap-and-trade system, carbon tax, or emissions credits market applicable to the oil and gas sector. However, there are concrete proposals and early-stage initiatives for the use of oil and gas upstream and midstream assets in connection with energy transition projects, particularly in the area of green hydrogen.

Green Hydrogen

Reutilisation of pipeline infrastructure for hydrogen transport

The Green Hydrogen Roadmap identifies Bolivia’s existing gas pipeline network as a key asset for the H₂V value chain. Blending of up to 20% hydrogen with natural gas in existing pipelines has been identified as technically feasible at medium pressures.

Phased approach

The Roadmap envisages a phased approach with road and rail transport of compressed H₂V in the short term; blending through existing gas pipelines (including for potential export to Brazil) in the medium term; and dedicated hydrogen pipelines for domestic distribution and export via Pacific ports in the long term.

Use of depleted wells for hydrogen storage

The Roadmap identifies underground storage in depleted petroleum wells as a potential solution for large-scale H₂V storage. A historical registry of approximately 2,400 exploratory and producing petroleum wells was identified, of which 57 abandoned wells in Santa Cruz, Cochabamba, Chuquisaca and Tarija were preliminarily identified as candidates.

Petrophysical properties and well integrity

These wells would need to be characterised for petrophysical properties and well integrity before validation. Once validated, they could represent an attractive alternative for storing large quantities of H₂V at reduced costs.

YPFB initiatives

The YPFB has been developing initiatives at the basic engineering level for H₂V generation from water produced in its petroleum fields, and has begun working on plans with ENDE to supply electrolysers through SIN.

Beyond the matters addressed in 6.1 Energy Transition Laws and Regulations and 6.2 Energy Transition and Oil and Gas Development, three additional considerations are material for understanding the impact of energy transition on traditional oil and gas development in Bolivia.

Additional Considerations

Regional electrical integration

The Plan Eléctrico Referencial 2035 identifies Bolivia’s geographic position, between the Andean Community (“CAN”) and the South American trade bloc and customs union (“MERCOSUR”), as a strategic advantage for becoming a regional energy hub. Bolivia has pursued interconnection projects with Brazil, Paraguay and Chile, and holds membership in the Andean Electrical Interconnection System (SINEA) and the Energy Integration System of the Southern Cone Countries (SIESUR).

MOUs have been signed with Brazil (most recently in 2024) and Chile (July 2025) to advance cross-border electrical interconnections. While primarily aimed at optimising renewable energy utilisation, these interconnections could also create export opportunities for surplus generation, potentially affecting the economics of domestic gas-to-power operations.

Green hydrogen export potential

The Roadmap identifies Brazil, Japan, South Korea and Germany as the primary target markets for Bolivian H₂V exports. The export strategy contemplates leveraging existing gas pipeline infrastructure for blending-based exports to Brazil, and a potential dedicated pipeline through the port of Arica (Chile) for access to Asian markets.

Exportable H₂V volumes are estimated at between 0.08 and 2.61 million tons per year, depending on production capacity. Bolivia will face competition from Chile and Colombia, both of which are developing export-oriented hydrogen strategies. For oil and gas operators, this represents a potential new value chain that could leverage existing petroleum infrastructure while creating new revenue streams as traditional production declines.

Proposed legislative reforms

The proposed new Electricity and Renewable Energy Law would introduce structural changes, including a competitive electricity market model with greater private-sector participation, renewable energy auctions as a market allocation mechanism, and an independent system operator for the wholesale market.

The government has also stated that the proposed law would enable distributed generation, allowing consumers who generate electricity through solar panels to sell surplus energy back to the grid.

These impacts are expected to evolve significantly over the next five to ten years. If the government’s legislative agenda advances as announced, the approval of the four proposed structural laws during 2026, followed by implementing regulations and international investment promotion in 2027, could fundamentally reshape the regulatory landscape for both traditional hydrocarbons and renewable energy.

However, the final scope and pace of these changes will depend on the specific provisions of the legislation, political dynamics within the legislative assembly, and the implementing regulations that follow. Until then, the current legal framework – which does not comprehensively regulate energy transition or provide specific incentives for transitioning oil and gas assets – remains in effect.

There are no special laws, regulations or licences relating to the upstream development of unconventional interests in Bolivia; neither special treatment nor direct and clear prohibition has yet been enacted.

There are currently no special laws, regulations or LNG licences in Bolivia. During 2003, an LNG project called “Pacific LNG”, aimed at exporting Bolivian natural gas to Mexico and the USA through Chilean ports, was used by organised activists to topple a democratically elected government.

As a result, not only Bolivian regulations but also local sensibilities make the progress of any LNG project extremely difficult. Bolivia’s status as a landlocked country adds further complexity. A regasification plant has been installed in the Province of Beni and an LNG plant in the Province of Santa Cruz; both are operated by the YPFB.

One of the most distinctive aspects of Bolivia’s hydrocarbon industry is the tension between a highly state-centred constitutional framework and the country’s current need to attract private capital, technology and operational capacity. Under the Constitution, the YPFB is the only entity authorised to conduct and control hydrocarbon activities, and private investors generally participate as service providers or through structures involving the YPFB. This framework was developed in the context of the 2005–2006 nationalisation process, which restored the YPFB’s central role and increased the direct Government Take in upstream operations.   

This legal model is now being tested by a very different market reality. Bolivia is facing declining production, reduced investment, lower exports and growing dependence on imported fuels.  Government officials have also acknowledged that current gas reserve estimates are uncertain and that, if the production decline continues, Bolivia may need to import natural gas towards the end of the decade.   

For investors, the key point is that Bolivia’s hydrocarbon opportunity is closely linked to legal reform. The current government has announced a new hydrocarbons law that would seek to introduce a progressive fiscal system, adapt economic terms to the geological risk of each area, and create contractual structures capable of providing a reasonable rate of return. The stated policy objective is to change the economic equation so that resources that are currently uneconomic can become commercially viable reserves.

Bolivia also has significant installed infrastructure that is currently under-utilised. Existing gas pipelines could be used for regional transit arrangements, including the movement of Argentine gas to Brazil, while refineries operating at approximately 30% capacity could be supplied with imported crude.

These factors make Bolivia unusual – the principal investment question is not just whether hydrocarbon resources exist, but whether the legal framework can be adjusted quickly enough to make exploration, production, transportation, refining and fuel supply commercially bankable.

There have been two material regulatory developments in the downstream hydrocarbons sector over the past year.

Exceptional and Transitional Emergency Law to Ensure the Supply of Diesel and Gasoline

First, in response to Bolivia’s fuel supply crisis (particularly diesel), the legislative assembly enacted the Exceptional and Transitional Emergency Law to Ensure the Supply of Diesel and Gasoline. The law created a temporary regime for the importation, transportation and commercialisation of liquid fuels during emergency conditions.

It allowed importing companies to dispatch fuel directly to service stations; placed quality and traceability oversight under the ANH; introduced temporary VAT and Transactions Tax exemptions for fuel imports; and allowed commercialising companies to operate under a free-market pricing regime.

However, this law was expressly transitional and is no longer in effect. Its relevance lies in the regulatory discussion it opened on private fuel imports, emergency downstream liberalisation and ANH traceability controls. Certain stakeholders questioned the constitutionality of some provisions, although the practical impact was limited by the law’s short duration.

Supreme Decree No 5619

Second, Supreme Decree No 5619, dated 14 May 2026, repealed Supreme Decree No 4718 and introduced a more stringent quality-control framework for operators, importers and marketers of fuels. The decree expands control, traceability and documentation obligations throughout the fuel supply chain.

Among other requirements, it mandates full quality analysis certificates for importation and production, verification analyses for transportation and storage, registration of operators in the regulator’s IT system under oath, and retention of technical documentation for five years.

Supreme Decree No 5619 also requires operators to maintain civil liability insurance covering damage caused by non-compliant products. Non-compliant products may be subject to treatment, final disposal, transfer to the YPFB or recertification when stored for more than 180 days.

The decree also strengthens the regulator’s powers to conduct oversight, impose preventative measures, seal storage systems, and require operators to bear the costs of analysis, transportation, storage, treatment and final disposal of non-compliant products.

This reform is particularly important because fuel quality has become a major regulatory and commercial concern in Bolivia following reported incidents involving poor-quality fuels. Operators, importers, wholesalers and logistics providers should review their supply contracts, laboratory arrangements, insurance coverage and traceability procedures to ensure compliance with the new regime.