Bolivian army seizes gas fields
Bolivian President Evo Morales has nationalized his nation's natural gas industry (photo), ordering the military to seize fields, the Associated Press has just reported. Morales also said he would boot out foreign companies that don't surrender control of the entire production within six months. After Venezuela, Bolivia has South America's largest natural gas reserves. Natural gas has been a major flash point in Bolivia for several years.
"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," Morales said Monday in a speech from the San Alberto petroleum field in southern Bolivia to decree what he called a nationalization of the natural gas industry.
Update at 4:55 p.m. ET: The AP has posted a look at Bolivia's natural gas industry and the companies involved. Find it after the full story, below.
Update at 5:05 p.m. ET Last month the Democracy Center in Bolivia offered some perspective on the country's gas and oil policy, while New American Media noted in an analysis in January that Morales was staking Bolivia's future on China, a major importer of natural gas. The Financial Times also wrote about "China's new Latin American revolution."
Update at 6:35 p.m. ET: The New York Times has posted an early version of its take on the day's events.
(AP Photo by TVB Channel 7)
Bolivia's president orders army to natural gas fields
By ALVARO ZUAZO
Associated Press Writer
LA PAZ, Bolivia (AP) - President Evo Morales ordered soldiers to immediately occupy Bolivia's natural gas fields Monday and threatened to evict foreign companies unless they sign new contracts within six months giving Bolivia majority control over the entire chain of petroleum production.
Morales said soldiers and engineers with Bolivia's state-owned oil company would be sent to installations operated by foreign petroleum companies.
"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," Morales said in a speech from the San Alberto petroleum field in southern Bolivia operated by Brazil's Petroleo Brasileiro SA in association with the Spanish-Argentine Repsol YPF SA and France's Total SA.
Bolivia has South America's second largest natural gas reserves after Venezuela, and all foreign companies must turn over most production control to Bolivia's cash-strapped state-owned oil company, Yacimientos Petroliferos Fiscales Bolivianos, Morales said.
An Army spokesman did not immediately return a telephone message seeking comment on when and how the military would act.
Morales, a strident leftist, had pledged to exert greater state control over the industry since he won the presidency in December in a landslide, becoming Bolivia's first Indian president.
Multinational companies that produced 100 million cubic feet of natural gas daily last year in Bolivia will be able to retain only 18 percent of their production, with the rest being given to YPFB, he said. Morales did not name the companies.
Other major petroleum companies doing business in Bolivia, besides Petroleo Brasileiro and Repsol, include Britain's BG Group PLC and BP PLC and U.S.-based Exxon Mobil Corp.
A Repsol spokesman said the company could not respond because it had not received official word of the announcement. Petrobras officials did not immediately return messages seeking comment on Monday, a national holiday in Brazil.
Morales said the government would begin negotiations immediately with the companies to make sure they are willing to comply, but said they could be stripped of their privilege to operate in Bolivia if they don't sign new contracts within six months.
In the past, YPFB produced Bolivia's natural gas, but it was reduced to an administrative role in the mid-1990s after the country's gas exploration and production business was privatized. Experts have warned that the company is incapable of becoming a producer again without a massive infusion of cash.
Morales has repeatedly said the country's natural resources have been "looted" by foreign companies and must be nationalized so that Bolivians could benefit from the profits that were being sent overseas.
But he has also said that nationalization will not mean a complete state takeover, because Bolivia lacks the ability to tap all its natural gas on its own.
Last week, Morales told Brazil's Valor Economico newspaper that Bolivia would have to "set up a new battalion, a new army of oil and gas specialists to exert the property right" for a complete state takeover of petroleum production.
Morales chose May 1, International Day of the Workers, to announce the nationalization plan. He wore a YPFB helmet as he gave his speech. Afterwards, a soldier unfurled a Bolivian flag from atop the natural gas installation.
Morales also said the state would retake majority control of Bolivian hydrocarbons companies that were partially privatized in the 1990s.
Morales is following the path of Venezuela's President Hugo Chavez, his populist political mentor, said Pietro Pitts, editor-in-chief for the Venezuela-based LatinPetroleum.com.
Chavez has also moved to exert greater control over his country's vast petroleum reserves. Most foreign companies have decided to keep producing in Venezuela, though some announced they would abandon some production.
"You can call Bolivia Venezuela Part II because it seems like he (Morales) is going to try to do the same thing that Chavez is doing," said Pitts, referring to giving the state majority control of hydrocarbons.
Ecuador's Congress last month ratified a hydrocarbons reform law designed to cut into windfall profits of foreign crude producers, among them U.S.-based Occidental Petroleum Corp.
The law would give the government 50 percent of oil company profits whenever the international oil market exceeds the prices established in existing contracts. Most of those deals were pegged to 1990s oil prices when crude was worth a fraction of today's market.
The Ecuadorean law sparked sharp reaction from Washington. A U.S. Embassy spokeswoman said recently that the law appeared to violate a bilateral investment treaty between the two nations.
AP Business Writers Frank Bajak and Alan Clendenning contributed to this story from Bogota, Colombia and Mexico City.
A look at Bolivia's gas resources and key foreign companies involved in exploration and production
By The Associated Press
(AP) - Bolivia has proven and potential natural gas reserves of 53.3 trillion cubic feet, second in South America to Venezuela's 151 trillion cubic feet, according to the U.S. Energy Information Administration.
Foreign companies say they have invested US$3.5 billion for Bolivian gas production and exploration since 1997, but new investments have been largely put on hold since last year due to political uncertainty and a new law raising payments the companies must give the government.
On Monday, President Evo Morales called on soldiers to occupy the gas fields and threatened to evict foreign companies unless they sign new contracts within six months giving Bolivia majority control over the entire chain of production.
The companies include:
• BG GROUP PLC: British Gas Group is a partner in two large gas fields, and has eight exploration blocks that have not started production.
• BP PLC: British Petroleum explores for petroleum and produces it through partnerships. Owns a 30 percent stake of Empresa Petrolera Chaco SA, whose other principal shareholder is the Bolivian population represented by pension funds. Owns 60 percent of Pan American Energy, which controls a big block in partnership with BG and Repsol YPF. BP also supplies aviation fuel at 15 Bolivian airports.
• EXXON MOBIL CORP.: The American company does not produce gas in Bolivia, but holds a 34 percent interest in a field where Total is producing. British Gas holds a 25 percent interest in the same bloc.
• PETROLEO BRASILEIRO SA: Brazil's state-owned oil company produces gas and transports two-thirds of Bolivia's daily gas production to Brazil. Petrobras also owns two refineries that account for 95 percent of the nation's refining capacity, a quarter of Bolivia's gasoline stations and a significant pipeline transportation network.
• REPSOL YPF SA: The Spanish-Argentine company started exporting Bolivian gas to Argentina last year, supplying an area in northwestern Argentina where demand is outstripping supply. Analysts say Repsol's rights to gas in Bolivia represent about a third of the company's total oil and gas reserves.
• TOTAL SA: The French company produces in five gas fields with exports to Argentina and Brazil. Announced a new find it called "significant" last year that was being assessed for production.
Posted by Michael Winter at 04:20 PM/ET, May 01, 2006 in World | Permalink
