Bolivia
to seize oil and gas reserves, president-elect says
By
Stewart Bailey and Alex Emery
Bloomberg
News
South Africa
Petroleumworld.com 01 13 06
Bolivia's
president-elect 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," Evo Morales told
reporters yesterday in Pretoria, South Africa, where he is visiting
the country's President Thabo Mbeki. Oil companies "will
be partners, not owners," he said.
Evo
Morales, Bolivia's president-elect, who is visiting South African
President Thabo Mbeki, said oil companies "will be partners,
not owners."
The
comments clarify plans Morales has discussed since his election
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 Spain's Repsol YPF SA,
which owns 35 percent of the country's 55 trillion cubic feet
of natural gas, and Brazil's Petroleos Brasileiros SA (Petrobras),
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. His plans do not call for confiscation
of multinationals' technology or other assets, he said.
Petrobras,
Brazil's state-controlled oil company, said yesterday that it
will lead an $18 billion effort to expand offshore oil and gas
production, aiming in part to cut dependence on supplies from
Bolivia. Brazil gets about half of its gas, 24 million cubic meters
a day, from Bolivia, furnishing fuel to South America's biggest
industrial center, Sao Paulo.
Morales,
on a 10-country tour that began last week, failed to give details
of his energy plan or define what he meant by nationalization
until yesterday, said Sebastian Briozzo, 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.
International
oil companies, including France-based Total SA and Britain-based
BG Group PLC, will be able to recover their investments and make
a profit in Bolivia, Morales said.
"He
needs the companies," said Peter DeShazo, director of the
Americas Program at the District-based Center for Strategic and
International Studies. "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, whom Morales later helped
drive from office with street protests, sold off state assets.
The new company will be involved in production, Morales said.
Bolivia
attracted $3 billion of investment for its oil and gas industry
since privatizing the state energy company in 1996, helping increase
its natural gas reserves sevenfold, according to the Bolivian
Hydrocarbon Chamber. Investment in the oil and gas industry dropped
to $135 million in 2005 from $236 million in 2004. In 2002, the
year Morales lost a presidential runoff against Sanchez de Lozada,
investment reached $345 million.
"Bolivia
has to get back into the markets, because they lost a lot due
to instability," said David Mares, a political science professor
at the University of California at San Diego.
Occidental
Petroleum Corp., the owner of 2.1 percent of Bolivia's gas reserves
through its purchase of Vintage Petroleum Inc., has monitored
the situation since before the election, said spokesman Larry
Meriage. "There's no surprise," he said.
Repsol
spokeswoman Silvia Durand in La Paz did not return calls seeking
comment. Petrobras declined to comment.
"It's
going to be tough sledding for international interests in South
America for the next while," said Dave Pursell, an analyst
at Pickering Energy Partners Inc. in Houston. "It's bad for
anybody who has assets in there right now."
Morales,
a 46-year-old Bolivian coca-farmers' leader, was elected after
pledging to challenge U.S. influence in Latin America and take
greater control of the country's oil and gas resources. He has
forged alliances with Cuban Communist leader Fidel Castro and
Venezuelan President Hugo Chavez.
Bloomberg
News, January 12, 2006
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