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  HOME | Bolivia

Bolivia’s poor wait for energy profits
SANTA CRUZ DE LA SIERRA, Bolivia – Just outside the barbed wire fence surrounding a highly automated petroleum refinery, Dora Rosado bakes meals for her six children in a wood stove fashioned from dried mud and bricks.

While the sprawling installation owned by Brazil’s Petrobras churns out cooking gas, it’s a fuel the single mother has never used in her two-room shack of rusty metal and roughhewn planks, where she’s lived for 14 years without running water or electricity.

Bolivia’s state-owned oil company sold the refinery and another for $100 million in the 1990s in a privatization wave intended to boost production and exports from its huge natural gas reserves. But such deals did little to benefit the 64 percent of Bolivia’s 8.5 million citizens who live in dire poverty.

Evo Morales was elected with the most popular support of any Bolivian presidential candidate in recent history after promising to secure more natural gas profits for people like Rosado. Even before Sunday’s inauguration, he’s been lobbying for better deals from the foreign companies extracting, refining and exporting the nation’s gas.
Rosado, who earns $50 a month as a restaurant cook working seven days a week, figures she won’t benefit anytime soon.

She supports the Aymara Indian leader and his Movement Toward Socialism party, but she’s seen Bolivian presidents come and go after making big promises, and questions whether he is able to wring meaningful concessions from big business.

“If he can change things and we can have a better house and a gas stove, great, but I doubt it,” said Rosado, washing clothes by hand in an old truck tire. “There’s riches at the refinery, but there’s nothing here.”

And there are strong signs that Morales, an admirer of Cuba’s Fidel Castro and his communist regime, realizes he can’t simply announce a state takeover.

He’s moderated his tough rhetoric from the campaign, when he accused international oil titans of “looting” Bolivia’s resources and touted vague plans to nationalize natural gas. Winding up a pre-inauguration world tour in Brazil, Bolivia’s biggest natural gas client, Morales said companies that have invested $3.5 billion since 1997 are welcome, but as partners and not owners.

The biggest holders of Bolivia’s proven and potential reserves include Petrobras, a state-owned company, known as Petroleo Brasileiro S.A.; Britain’s BG Group PLC and BP PLC; France’s Total SA; the Spanish-Argentine Repsol YPF SA and U.S.-based Exxon Mobil Corp.

Dozens of other large foreign companies also provide oil and gas field exploration, drilling and services in Bolivia, including the United States’ Baker Hughes Inc., Schlumberger Ltd. and Halliburton Co. – which has a basketball court inside a complex in Santa Cruz.

Morales also wants investment from China’s state-owned oil company. That may concern the United States, since China’s economic reach into South America is expanding rapidly through huge purchases of soy, copper, iron ore and steel. Experts say such commerce will translate into greater political influence. Expanding Bolivian gas shipments will require more pipelines. One possibility is joining a proposed network linking Venezuela to Argentina through Brazil – an idea to be discussed in Brazil this week by the three countries’ presidents before Morales’ inauguration Sunday.

Another possibility is reaching U.S. and northern Mexican consumers through a pipeline to the Pacific Ocean, but that was shelved in 2003 when Bolivia’s then-President Gonzalo Sánchez de Lozada was ousted in an uprising that killed 60 people. Morales helped lead that rebellion, backed by poor Bolivian Indians angry the pipeline would go through Chile and still seething over the 19th century war with Chile that left Bolivia landlocked.

Morales still insists on renegotiating the natural gas contracts, but he’s sounding less like a rabble rouser. His meetings with presidents and business executives during his world tour convinced him “the work of the government, the work of the president, is to do good business for the Bolivian people,” he said.

Bolivia’s cash-strapped state-owned oil company, Yacimientos Petroliferos Fiscales Bolivianos, isn’t capable of simply replacing the foreign companies. Oil industry experts say it needs technical expertise and an infusion of billions of dollars to better exploit Latin America’s second largest natural gas reserves after Venezuela.

And Bolivia’s business leaders hope Morales’ lobbying – especially his promise not to seize assets – will prompt energy companies to resume exploration and production frozen due to political instability and a Bolivian law that raised royalty and tax payments last year.

“Natural resources have to benefit Bolivians, but they also have to attract investors,” said Gabriel Dabdoub, who heads the Santa Cruz Chamber of Commerce and Industry, the city’s biggest business association.

Some petroleum companies are ready to cooperate.

Petrobras will accept reduced profits to keep exporting Bolivian gas and refining petroleum products at its two refineries, chief executive Sergio Gabrielli said. The installations in Santa Cruz and Cochabamba are responsible for 95 percent of Bolivia’s refining capacity.

“Lower profits are better than zero profit,” Gabrielli said after meeting with Morales in Brasilia.

And Repsol executive Julio Gavito said his firm will commit more re-sources if the investment climate becomes more clear.

But Morales doesn’t have much room to maneuver. Influential members of the loosely organized social movement that ousted two Bolivian presidents before bringing him to power are insisting on big concessions from foreign operators.

“The benefits of the gas have never passed down enough to the poor to make a difference,” said Jorge Cortés, Santa Cruz regional coordinator for Bolivia’s Collective of Applied Studies on Social Development. The group monitors the industry and supports economic development for Bolivia’s majority Indian population.

Bolivia’s vice president-elect, Alvaro García Linera, said the country received about $390 million in proceeds when the state-owned oil company ran the industry, and that foreign companies contributed about $500 million in taxes and royalties last year.

But Cortés says that increase doesn’t reflect higher petroleum prices as well as increased Bolivian production.

“They’re taking out more gas, but the state is receiving less money,” he said.
Cortés believ
es Bolivia should take control of 51 percent of its gas industry, and keep outsiders as minority partners. Rosado wonders whether that will ever happen.

“Evo’s saying the poor are going to benefit from the gas,” she said. “I hope so, but only God will decide.” AP

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