BOLIVIA: OIL AND GAS NATIONALIZED

from Weekly News Update on the Americas

On May 1, in a ceremony at the San Alberto oilfield in Carapari, Tarija department, Bolivian president Evo Morales Ayma signed supreme decree 28.701, ordering the nationalization of the country’s hydrocarbons resources. “The looting is over,” Morales announced as he ordered the armed forces to seize control of all the oil and gas fields. With the decree, the Bolivian state “recovers the property, possession and total and absolute control of these resources,” said Morales. Foreign companies now have six months to renegotiate their oil and gas contracts with the government; in the meantime they must give up control of their facilities and channel all sales through the newly refounded state oil company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB). Morales also ordered the confiscation of the shares necessary to guarantee more than 50% state control of the oil companies operating in Bolivia. (Resumen Latinoamericano, May 1; New York Times, May 2)

“If the negotiations do not go well, we could go to the next step, expropriation,” said energy minister Andres Soliz Rada. He said companies would be compensated. But the first step, said Soliz, is an audit of foreign company documents. “It’s time to open the black boxes of the petroleum companies.” (NYT, May 4)

Nationalization of Bolivia’s resources, especially gas and oil, had become the main consensus demand of the country’s grassroots movements following the popular protests that ousted ex-president Gonzalo Sanchez de Lozada. Sanchez was responsible for selling off the country’s hydrocarbons to transnational corporations at extremely unfavorable rates for Bolivia. The contracts were never ratified by Congress, as the Constitution requires, making their legality questionable. (Resumen Latinoamericano, May 1)

At a May 4 summit in the northeastern Argentine province of Misiones, the presidents of Argentina, Bolivia, Brazil and Venezuela confirmed their interest in moving together towards regional energy integration. The meeting was called to discuss the impact of the Bolivian nationalization. After a three-hour meeting, the four presidents held a joint press conference in the Casino Hotel in the town of Puerto Iguazu. Argentine president Nestor Kirchner said it was “one of the best meetings” he has taken part in as president.

The gathering was called by Brazilian president Luiz Inacio Lula da Silva; Brazil’s Petrobras is the largest foreign investor in Bolivia’s natural gas industry. A full 67% of the gas consumed by industry in Sao Paulo, Brazil’s industrial and financial center, comes from Bolivia. Before the nationalization, Petrobras had control of Bolivia’s two refineries, its biggest gas fields, a chain of gas stations and a pipeline running from Bolivia to Brazil. Petrobras will now have to negotiate a new contract, at a higher price. Although the presidents did not discuss prices, they acknowledged that they had agreed that gas supplies would be guaranteed. (Inter Press Service, May 4 via CorpWatch)

From Weekly News Update on the Americas, May 14

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Weekly News Update on the Americas
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