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  HOME | Bolivia

Morales to nationalize -- President-elect ready to cancel gas contracts
La Paz – Bolivian President-elect Evo Morales 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,” Morales told reporters Wednesday in Pretoria, South Africa, where he is visiting the country’s President Thabo Mbeki.
Oil companies “will be partners, not owners,” he said. The comments clarify plans Morales has discussed since his election on 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 Repsol YPF SA, which owns 35 percent of the country’s 55 trillion cubic feet of natural gas, and Petrobras S.A., 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.
“There is a sentence in some contracts that says the multinationals acquire rights at the mouth of the extraction,” Morales said. “That clause is not going to be there any more.”
His plans don’t call for confiscation of multinationals’ technology, he said.
Morales, during a 10-country tour that began last week, failed until Wednesday to give details on his energy plan or define what he meant by nationalization, said Sebastian Briozo, 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. New State Company International oil companies,



which include Courbevoie, France-based Total SA and Berkshire, U.K.-based BG Group Plc, , will be able to recover their investments and make a profit in Bolivia, Morales said. “He needs the companies,” Peter Deshazo, director of the America’s Program at the Center for Strategic and International Studies, said in a phone interview.

“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, who Morales helped drive from office with street protests, sold off state assets. The new company will be involved in production, he said. Bolivia attracted $3 billion in investment in its oil and gas industry since privatizing the assets of YPFB, as the state energy company was known, in 1996, helping increase Bolivia’s natural gas reserves sevenfold, according to the Bolivian Hydrocarbon Chamber Higher Taxes.

“It’s going to be tough sledding for international interests in South America for the next while,” David Pursell, an analyst at Pickering Energy Partners in Houston, said in a telephone interview today. ‘It’s bad for anybody who has assets in there right now.”

Morales, a 46-year-old Bolivian coca-farmers’ leader, was elected pledging to challenge U.S. influence in Latin America and take more control of the country’s oil and gas resources.

He has forged alliances with Cuba’s Communist leader Fidel Castro and Venezuela’s Hugo Chavez. Morales’ Vice-president elect, Alvaro Garcia, said last week the government will tax production at 70 percent to 80 percent, a level that he said is about average for state-owned oil companies in Latin America according to the La Paz daily newspaper La Prensa La Prensa. Bloomberg
 

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