LA PAZ – Bolivia’s new leftist government expects this week to raise the price of natural gas for two key clients, Brazil and Argentina, and hopes to re-negotiate over the next six months its contracts with the multinational companies that control gas production, a top energy official said.
Recently inaugurated President Evo Morales has pledged to harness more profit from Bolivia’s natural gas reserves, which are South America’s second largest after Venezuela.
Jorge Alvarado, president of Bolivia’s state petroleum company Yacimientos Petróleros Fiscales de Bolivia (YPFB), has taken charge of setting new gas prices with Bolivia’s two neighbors who buy the gas at between $U.S.3.18 and $U.S.3.25 per 1,000 cubic feet.
Current trading prices in the United States are almost triple that, according to the U.S. Department of Energy.
“We’re working on the issue of prices,” Alvarado said on Tuesday. “By the end of the week, we’re going to have it defined, at least in respect to the contracts with Argentina and Brazil.”
Morales wants to revitalize the state petroleum company, which lost most of its power and was gutted financially after Bolivia privatized natural gas production in the mid-1990s. The company currently operates only at a bureaucratic level.
It’s estimated the government will need at least U.S.$600 million (euro 489 million) to make YPFB viable, but there is no clear source for the money.
The government is also hoping YPFB can expand Bolivians’ access to their own abundant gas. Very few have gas service in their homes or offices.
China is promising U.S.$60 million (euro 50 million) and Canada U.S.$50 million (euro 41 million), both in credits, to help expand this service, Alvarado said, according to government news agency ABI.
The biggest holders of Bolivia’s proven and potential reserves include Brazil’s state-owned company Petróleo Brasileiro S.A., or Petrobras; 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.
Morales named Marxist free-market critic Andrés Soliz as minister of hydrocarbons, signaling the government will be a potentially tough negotiating partner for the companies.
Alvarado said the government will wrap up contract negotiations with the foreign companies within six months.
A Bolivian law enacted last year raised oil and gas production taxes and royalties to 50 percent, and at least on paper makes the state the sole owner of production. AP