Venezuelan leader Hugo Chavez paid a last-minute visit of support to Bolivian President Evo Morales ahead of a hastily-arranged summit to avert a regional crisis over the Andean nation’s nationalisation of its natural gas sector.
The socialist Chavez, a political mentor and ally of the leftist Morales, said he came to Bolivia late on Wednesday not to give advice but to offer ”congratulations and learn from Bolivia’s wisdom”.
”With good will, Morales will reach the agreements he needs to make with the foreign companies,” Chavez said after arriving in the capital of La Paz.
Chavez spoke after Brazil — Bolivia’s biggest gas client — summarily announced it would cut off all new petroleum investment in Bolivia where it has pumped $1,6-billion to boost production over the last decade.
Just hours earlier, the European Union expressed concern over Morales’ order for army troops to guard more than 50 natural gas installations, most operated by foreign companies since Bolivia privatised petroleum production in the mid-1990s.
Morales and Chavez will fly on Thursday morning to the Argentine city of Puerto Iguazu along the border with Brazil. There, they will join Brazilian President Luiz Inacio Lula da Silva and Argentine President Nestor Kirchner to discuss Monday’s
announcement by Morales that he had nationalised Bolivia’s natural gas reserves and will reduce foreign participants to minority players.
While Silva said he believes he can negotiate a solution to the controversy, he asserted he will defend its contracts giving it rights to Bolivian gas.
”The fact that Bolivia has rights does not deny the fact that Brazil has rights in the matter as well,” Silva said.
Morales and Chavez also planned to discuss Chavez’s idea to construct a 9 000km pipeline linking Venezuela’s vast natural gas reserves through Brazil to Argentina, Chavez said.
The pipeline, estimated at $25-billion, would also branch to Bolivia, Paraguay and Uruguay — though experts have predicted the cost could come in much higher and environmentalists are already railing against the project because it would cut
through the Amazon.
The summit comes amid a tense backdrop, with Argentina and Brazil resisting for weeks Bolivian demands that they should pay more for the gas, used for power generation, cooking gas and to fuel cars.
Both nations and the companies that extract Bolivian gas were not surprised when Morales announced his long-awaited campaign promise to nationalise the industry, but the images of soldiers with automatic weapons dispatched to the gas installations was widely viewed as an unnecessarily harsh move.
After Silva spoke, Petroleo Brasileiro SA president Sergio Gabrielli said the company has suspended all investments in Bolivia including those earmarked to a project aimed at increasing gas production by up to 15-million cubic metres a day.
Spain, worried about the fate of Spanish-Argentine company Repsol SA — another big player in Bolivia’s gas industry — said Wednesday that it was sending a delegation to discuss grave concerns about the impact of the nationalisation on the company.
While Morales wants Bolivia’s cash-strapped state-owned Yacimientos Petroliferos Fiscales Bolivianos petroleum company to dominate gas production as part of the nationalisation plan, the company has functioned as little more than a bureaucracy for a decade since the Bolivia’s gas industry was privatised. Experts say it would take a huge infusion of cash to transform the company into a capable operation.
Bolivia wants the company to oversee all aspects of gas production, refining and sales — but it’s not clear how it can come up with the money and expertise it needs to wrest control of the industry from the foreign companies now managing it.
It’s even less clear what most of the foreign companies, and the governments that defend their interests, will do now that they face dramatically lower profits.
EU Energy Commissioner Andris Piebalgs and Austria’s Economy Minister, Martin Bartenstein, issued a statement expressing concern over Morales’ decision to send troops to guard energy installations.
Morales, a populist who won a landslide victory in December, has long vowed to take back control of Bolivia’s natural resources.
While Bolivia has vast mineral and forestry wealth, the country’s most valuable asset is its natural gas reserves — the continent’s second-largest after Venezuela.
But assuming control of all gas operations in Bolivia is a lofty proposition that analysts say YPFB is probably incapable of executing.
Under Monday’s decree, foreign companies must sell a majority stake of their participation to YPFB. Yet it remains unclear how Bolivia will come up with the several billion dollars needed for that deal.
”YPBF may have the will, but it certainly doesn’t have the capital or the technology to continue operating the fields in Bolivia” without the foreign companies, said Bolivia’s former energy minister, Carlos Alberto Lopez.
The decree also immediately raised the tax on the production from Bolivia’s two largest gas fields from 50% to 82%. This could boost government revenue to $750-million from $450-million, according to Bolivian Vice-President Alvaro Garcia Linera. – Sapa-AP