Bolivia defends gas grab

Bolivia defended on Tuesday the government’s seizure of its vast natural gas industry after the move triggered deep concerns among major foreign investors.

Brazil, a huge consumer of Bolivian gas, and Spain expressed worry, while the United States said it was keeping an eye on the situation, one day after leftist Bolivian President Evo Morales gave foreign gas and oil investors 180 days to renegotiate their contracts with Bolivia’s state-owned oil and gas company.

The government, which sent troops to guard the gas and oil fields, defended its decision.

“The [international gas] companies are going to keep making money, but now theirs will be normal profits,” Vice President Alvaro Garcia Linera said.

“Before the decree, operating in Bolivia was like winning a lottery because their profits were abusive,” Garcia Linera said on Bolivian television.

The vice-president insisted gas fields and refineries were operating normally and argued that the decree was necessary to make state-run Yacimientos Petroliferos Fiscales Bolivianos (YPFB) a money-maker.

Under the decree YPFB will become majority shareholder in reformed corporations.

Oil and Gas Minister Andres Soliz said fields were operating normally, but under government supervision. That will continue, he said, “as long as there is no resistance from the oil and gas companies to comply with the nationalisation decree”.

The decree gave foreign companies 180 days to sign new contracts. “At the end of this time period, companies that did not sign new contracts cannot continue to operate in the country,” it said.

During the transition period, 82% of profits will go to the Bolivian state and 18% to corporations.

Bolivia is South America’s poorest nation but has the continent’s second-largest natural gas reserves, after Venezuela. Bolivia does not export oil.

Business interests in neighbouring Brazil were angered by the move. Fifty percent of gas consumed in Brazil comes from Bolivia and Brazil’s state-run Petrobras energy company is the top foreign investor in Bolivia.

President Luiz Inacio Lula da Silva held an emergency meeting with ministers and Petrobras executives, and his spokesperson said he would consult with other South American leaders over the issue.

“Bolivia is poor, and it is fair that the president of Bolivia defends interests to improve the quality of life of his people,” Lula said on Monday.

“On international differences, they can rest assured that we will sit down at the table and work out the problem.”

Petrobras decried Morales’ decree.

“This was simply a unilateral decision, made in an unfriendly way, which requires us to review very carefully the situation in Bolivia,” Petrobras chairperson Sergio Gabrielli said.

“Petrobras will take all legal measures necessary to protect its rights,” he added.

Spain’s foreign ministry expressed “profound worry” about the move, while Spanish oil giant Repsol YPF, which has substantial investments in Bolivia, called it “worrying news”.

Repsol accounted for 25,7% of Bolivian gas production through its subsidiary Andina prior to nationalisation.

Repsol chief Antonio Brufau said in Buenos Aires: “Now we have to review the meaning of the decree, discuss it with authorities, and then later we will see if it is possible for us to reach a rational agreement between the two sides.”

The United States reacted cautiously.

“We are looking into it,” said White House spokesperson Scott McClellan.

“We have not been able to determine if any official change has been made at this point and what impact that might have,” McClellan told reporters in Washington. – AFP

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