The latest rhetoric from Bolivia’s new leadership seems ominous for the foreign energy companies faced with the prospect of renegotiating their contracts to extract and export Bolivia’s gas.
“Some multinationals already have conspiracies,” Morales said Monday in one of his harshest speeches since taking office two weeks ago. He said Bolivia’s military leaders are preparing a response, and he pledged to bring government control over all levels of oil and gas exploitation.
And if that doesn’t provide enough leverage, Morales said he’ll send Bolivians into the streets to defend his government’s plans to keep more of the profits in Bolivia.
Analysts believe Morales will try to model Bolivia’s energy industry after Venezuela’s, where most multinational oil firms are managing to live under a system dominated by President Hugo Chavez’ socialist government.
“Overall state control with foreign participation is as good as you are going to get in South America at this moment,” said Riordan Roett, director of Western Hemisphere studies at Johns Hopkins University.
First, Morales’ leftist government must find hundreds of millions of dollars to turn its state energy company into a player capable of ruling over multinational companies that have developed Bolivia’s gas since a mid-1990s privatization wave.
He also wants higher prices for the natural gas sold to Bolivia’s two major clients – Argentina and Brazil – and more profits he can pass on to Bolivia’s poor.
Morales hasn’t provided de-tails about his nationalization plans, but he signed an accord with Chávez on his first day in office for state-owned Petróleos de Venezuela S.A., to help Bolivia develop its energy reserves and revitalize the virtually defunct Bolivian state oil company – Yacimientos Petroleros Fiscales de Bolivia. PDVSA also opened an office in La Paz.
The foreign companies that invested $3.5 billion in Bolivia since privatization are now retooling their business plans, with striking differences in strategy.
Brazil’s state-owned company Petróleo Brasileiro S.A., or Petrobras, is promising new investment in Bolivia and negotiating to ensure it can keep profiting in a country that supplies half the natural gas Brazil consumes for power generation, cooking gas and as automobile fuel.
But the Spanish-Argentine oil titan Repsol YPF S.A. took the extreme move of cutting its own oil and gas reserves estimate by 25 percent, largely due to Bolivian production prospects made shaky by political uncertainty.
The company also froze $480 million it had earmarked for boosting Bolivian gas production.
Analysts say Repsol had to write off the reserves to calm the market, because its stake in Bolivia made up a much larger portion of its overall reserves than Petrobras or the other big investors – Britain’s BG Group PLC and BP PLC; France’s Total SA; and U.S.-based ExxonMobil Corp.
These other companies may have to follow suit to a lesser extent, depending on the re-sults of the contract re-negotiations, which are expected to last through June.
Dozens of other large foreign companies also provide Bolivian oil and gas field exploration, drilling and services, including the United States’ Baker Hughes Inc., Schlumberger Ltd. and Halliburton Co.
“Nobody’s pulled out yet, but if the government is too aggressive and tries to get too greedy they can scare these guys off,” he said. Vice President Alvaro García Linera, a former guerrilla, doesn’t appear to be backing down.
“It’s necessary to mobilize against those who want to do us damage, because the petroleum companies, the gringos, are going to pressure us,” García Linera told rural union leaders on Monday, with Morales by his side.
Petrobras owns two refineries that control 95 percent of Bolivia’s refining capacity, and gets plenty of image boosting from its brightly painted and squeaky clean gas stations from Bolivia’s Andean highlands to its tropical lowlands.
They stand out in sharp contrast to the dozens of dingy gas stations YPFB rented out as favors to politicians since privatization. One of the few signs of YPFB activity is an ancient warehouse in La Paz where workers fill canisters with natural gas for cooking.
YPFB President Jorge Alvarado, a petroleum geologist, plans to begin operating the gas stations again with a $10 million loan from Venezuela, and wants to buy back the Petrobras refineries.
But first, YPFB must become a legitimate state-owned oil company like Petrobras or Venezuela’s PVDSA, capable of overseeing the entire chain of petroleum production.
That could take two years, Alvarado says. Right now, the company is mainly a bureaucracy that lacks technical expertise. Some parts of its Web page – like company operations – are still under construction.
Alvarado said Bolivia could turn to other financial backers if current contract holders aren’t interested in new terms.
Besides Petrobras and PDVSA, the governments of Russia, India and China have expressed interest in partnerships, Alvarado said.
Ultimately, Alvarado said, the goal is to do business only “with companies that want to have partnerships with us, always remembering that the hydrocarbon property belongs to the Bolivian state.” AP