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Brazil-Bolivia tensions rise over oil plans
Petroleumworld
BRASILIA
Petroleumworld.com 09 15 06
President Luiz Inacio Lula da Silva said Thursday that Bolivia reversed its threats to nationalize two Brazilian-owned oil refineries without compensation -- but fellow leftist, President Evo Morales, is still demanding Brazil pay more for Bolivian gas.
The decision "has already been frozen," Lula told local television.
Bolivian Vice President Alvaro Garcia Linera confirmed the reversal from La Paz, after Brazilian officials -- as well as Lula's opponent in October 1 elections -- cried foul.
Brazil's state-run Petrobras is Bolivia's largest petroleum investor, with 1.5 billion dollars, and has taken the brunt of Morales' nationalization program.
On May 1, the Bolivian president ordered all foreign oil companies to negotiate new concession contracts, because those in force unjustifiedly favored foreigners, Morales said.
Also in May, Morales notified Argentina and Brazil, which together buy all of Bolivia's gas exports, that their gas bills would double.
On Thursday Bolivian oil and gas minister Andres Soliz vowed "no step back" from the seizure of the Petrobras-owned Villarroel and Elder refineries, where 90 percent of Bolivia's crude is refined into derivatives for domestic use.
The expropriation would have given Bolivia state-owned Yacimientos Petroliferos Fiscales Bolivianos (YPFB) complete control of refining.
Bolivia announced the expropriation on Tuesday, which landed like a bomb as Lula was hosting a summit with Indian and South African leaders on addressing energy problems.
"Obviously, if Bolivia continues with these unilateral actions, Brazil will have to think about being tougher with Bolivia," Lula told Bandeirantes television Thursday.
"Bolivia is a very poor country, and the Bolivian people need Brazil's help." Bolivia is the poorest nation in South America.
Lula's opponent in the October presidential race, Brazilian Social Democratic Party (PSDB) candidate Geraldo Alckmin, said: "Lula's position was submissive, absent and weak." He added that Lula had put his ideology of regional economic integration ahead of Brazil's interests.
"The Bolivia matter is one more example but that has been the routine," he told reporters.
On Thursday, chief officer of Petrobras Sergio Gabrielli and Brazilian Energy Minister Silas Rondeau were poised to head to Bolivia to patch up the May debacle, but canceled the trip at the last minute after Bolivia announced the expropriation.
The meeting was postponed until October 9, Brazil's energy minister Rondeau said, after the expropriation announcement "undermined the process" of gas price talks.
Petrobras is still reeling from Bolivia's demands for a steep hike in the 25 million cubic meters of gas -- about half of Brazil's daily needs -- it sells, from four dollars per million Btu to perhaps twice as much.
Petrobras operates 14.5 percent of Bolivia's gas reserves, the second-largest in South America, after Venezuela's. Its stock price fell 2.4 percent on the Sao Paulo exchange Thursday.
In May, Morales gave foreign gas and oil investors 180 days to renegotiate their contracts with Bolivia's state-owned oil and gas company.
Additionally, Morales decreed in May that state-run YPFB would become majority shareholder in the subsidiaries of foreign companies in Bolivia.
During the transition period, 82 percent of profits will go to the Bolivian state and 18 percent to transnationals.
The expropriation of the Petrobras refineries was not announced sooner, because YPFB lacked the cash necessary to run it.
In the meantime, YPFB has pocketed 32.3 million dollars from Repsol, Total Fina and Petrobras, which has invested 1.5 billion dollars in Bolivia.
AFP 15 0256 GMT 09 06
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