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Brazil energy minister cancels Bolivia talks after gov't move on refineries
Geraldo Falcão/ Petrobras /0206
Refinaria Guilhermo Elder Bell, Santa Cruz de la Sierra, Bolívia.
By Elio Ohep
Petroleumworld
CARACAS
Petroleumworld.com 09 15 06Brazilian Energy Minister Silas Rondeau and Petrobras' Chief executive Sergio Gabrielli canceled a planned visit to Bolivia Friday after Bolivia's set new conditions for its partnership with Petrobras' refineries. Bolivia said Thursday that is to take over Petrobras Bolivian refineries without compensation.
According to statement by Bolivia's Ministry of Hydrocarbons, Bolivia's oil company Petrolíferos Fiscales Bolivianos (YPFB), as of Thursday began executing ownership rights of those fuels through a resolution issued by that ministry, through a resolution issued by that ministry, applying the nationalization decree of hydrocarbons. In the future, the official information points out, the state company will have the exclusive rights to export crude, liquid gas, oil and derivatives.
Silas Rondeau and Gabrielli visit was aimed at easing tensions between the two countries since Bolivian President Evo Morales decreed the nationalization of his country's petroleum resources in May.
In La Paz, Energy Minister Andres Soliz said the Petrobras refineries had been "improperly managed" but said the situation would be reviewed in light of the protest of the Brazilian firm, AFP reported.
Petrobras and Bolivia have been discussing compensations for the nationalization of the two oil refineries in Bolivia, that are own by Petrobras, as well as negotiating prices of natural gas imported by Brazil, which Bolivia wants to rise.
Silas Rondeau and Gabrielli "has canceled his trip to Bolivia," a spokesman for the company told news agencies adding that no new date had been scheduled.The energy ministry spokesman or Petrobras did not provide any reason for the cancellation, but sources said both considered Bolivia's move inappropriate just before a new visit to start new round of talks.
Dilma Rouseff, president Lula's Cabinet chief told reporters the government of Brazil as "deeply concerned" by the move by the Bolivian authorities.Earlier, Petrobras said the new rules would make its Bolivian refining business "totally inviable." and Rondeau had said that it was decided to cancel the meeting and suggested rescheduling it for Oct. 9. _ eight days after Brazil's presidential elections, AP reported.
Brazilian Polls show Brazil's President Luiz Inacio Luiz da Silva to garner more than 50 percent of the vote, avoiding a runoff.
Petrobras said it disagrees with the rules disclosed Thursday in Bolivia. Petrobras said the seizure of revenue by Bolivia's state-controlled oil company from Petrobras' refineries jeopardizes its financing and operations in the country, according to a statement on its web site:
09/13/2006
Communiqué about Petrobras in Bolivia
The Bolivian Ministry of Hydrocarbons and Energy published in the media this Tuesday, September 12th 2006, establishing new conditions for oil and liquefied petroleum gas (LPG) production, transportation, refining, storage, and marketing which encompass all of the byproduct price chain stages.
Considering this decision made by the Bolivian government, Petrobras manifests its disagreement with the measure from the legal, operational, and financial viewpoints, since it renders the Company's refining business totally unviable in that country.
The Company also clarifies that it is the Hydrocarbons Superintendence that establishes the refining margins. In May 2005, this regulatory agency established the margin that is currently in effect. This value is insufficient to cover the Company's cost, and that is the reason why Petrobras has requested it be reviewed on several different occasions.
During this period, the negative results Petrobras has achieved while keeping the internal market supplied have been compensated for by the favorable conjuncture of the international price for exported products (gasoline and reconstituted oil), even if this does mean the Company takes-on the risk of volatility in these prices in the international market. On account of this, Ministerial Resolution 207/2006 compromises the refining activity maintenance by preventing the Company's access to these markets.
By using modern operation and management technologies - despite the loss-making character of the internal market supply - after it took over refinery operations, Petrobras was able to achieve average gains of $14 million for an initial investment of $105 million, maintaining a constant flow of contributions to the Bolivian State. These values contradict the criterion that the Company has had "extraordinary benefits."
Additionally, the appropriation of the Company's cash flows by YPFB, imposed by MR 2007/2006, puts the maintenance of the financing the Petrobras has already contracted in jeopardy and, consequently, the normal maintenance of its activities as well. In this regard, Petrobras is evaluating possible measures it may adopt by virtue of this unilateral determination of the Hydrocarbons and Energy Ministry.
Notwithstanding the complex situation of Petrobras' permanence in Bolivia, the Company once again emphasizes its commitment to the country's development and expresses its deep concern with the negative effects this unilateral decision will have on the national and regional industry.
Since it commenced its operations in the refining segment, Petrobras has fulfilled, responsibly, its mission of ensuring the uninterrupted supply of the internal fuel demand, in compliance with the strictest international quality, safety, and environmental norms. Likewise, the Company asserts it operates and will always operate transparently, respecting the laws in effect in Bolivia.
Petrobras is the largest foreign investor in Bolivia and has invested about US$1.5 billion (euro1.2 billion) in Bolivian natural gas production and refining since the mid-1990s, when Bolivia privatized the on hydrocarbons industry.Brazil gets about 50 percent of the natural gas needs from Bolivia.
Bolivia has the continent's second-largest natural gas reserves, after Venezuela.
- Elio Ohep, editor@petroleumworld.com , 58 412 996 3730, Caracas, Venezuela
Petroleumworld News 14 09 06
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