Bolivia's Morales plans
state control of gas reserves
By Stewart Bailey, Alex Emery
Bloomberg News
Johannesburg / Lima
Petroleumworld.com 01 12 06
Bolivian President-elect Evo Morales said his government plans
to seize oil and gas reserves owned by international companies,
leaving other assets such as pipelines and refineries in the hands
of foreign operators.
``The state
will exercise its right of ownership and that means it will decide
on the use of those resources,'' Morales told reporters today
in Pretoria, South Africa, where he is visiting the country's
President Thabo Mbeki. Oil companies ``will be partners, not owners,''
he said.
The comments
clarify plans Morales has discussed since his election on Dec.
18 to ``nationalize'' Bolivia's oil and gas reserves and boost
government revenue on output. All reserves are now in the hands
of foreign companies such as Repsol YPF SA, which owns 35 percent
of the country's 55 trillion cubic feet of natural gas, and Petrobras
SA, which holds 17.5 percent. Bolivia has Latin America's second-largest
gas reserves.
Morales said
he will cancel any contract that gives foreign companies ownership
rights to oil and gas.
``There is
a sentence in some contracts that says the multinationals acquire
rights at the mouth of the extraction,'' Morales said. ``That
clause is not going to be there any more.''
His plans
don't call for confiscation of multinationals' technology, he
said.
Morales, during
a 10-country tour that began last week, failed until today to
give details on his energy plan or define what he meant by nationalization,
said Sebastian Briozo, an analyst at Standard & Poor's in
New York. In Spain and Holland last week, Morales repeated his
pledge to take greater state control of Bolivia's energy resources.
New State
Company
International
oil companies, which include Courbevoie, France-based Total SA
and Berkshire, U.K.-based BG Group Plc, , will be able to recover
their investments and make a profit in Bolivia, Morales said.
``He needs
the companies,'' Peter Deshazo, director of the America's Program
at the Center for Strategic and International Studies, said in
a phone interview. ``He needs to be able to attract foreign investment
in the gas industry and oil.''
Even so, Morales
said he plans to resurrect the country's state-owned natural resources
company. The company was shut down in 1996 as President Gonzalo
Sanchez de Lozada, who Morales helped drive from office with street
protests, sold off state assets. The new company will be involved
in production, he said.
Bolivia attracted
$3 billion in investment in its oil and gas industry since privatizing
the assets of YPFB, as the state energy company was known, in
1996, helping increase Bolivia's natural gas reserves sevenfold,
according to the Bolivian Hydrocarbon Chamber.
Higher Taxes
``It's going
to be tough sledding for international interests in South America
for the next while,'' David Pursell, an analyst at Pickering Energy
Partners in Houston, said in a telephone interview today. `It's
bad for anybody who has assets in there right now.''
Morales, a
46-year-old Bolivian coca-farmers' leader, was elected pledging
to challenge U.S. influence in Latin America and take more control
of the country's oil and gas resources. He has forged alliances
with Cuba's Communist leader Fidel Castro and Venezuela's Hugo
Chavez.
Morales'
Vice-president elect, Alvaro Garcia, said last week the government
will tax production at 70 percent to 80 percent, a level that
he said is about average for state-owned oil companies in Latin
America according to the La Paz daily newspaper La Prensa La Prensa.
To contact
the reporter on this story:
Stewart Bailey in Johannesburg
Sbailey7@bloomberg.net. or Alex Emery in Lima at
6262 or aemery1@bloomberg.net
Bloomberg
News 01/11/06
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© 2006 Bloomberg News. All rights reserved
