Bolivia moving to nationalise resources

The latest rhetoric from Bolivia’s new leadership seemed 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 on 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.

Riordan Roett, director of Western Hemisphere studies at Johns Hopkins University, said: “Overall state control with foreign participation is as good as you are going to get in South America at this moment.”

Morales’ strategy

Roett said Morales’ leftist government first had to 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 privatisation wave.

Morales 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, he said. 

Bolivia’s first indiginous president hasn’t provided details about his nationalisation plans, but he signed an accord with Chavez on his first day in office for state-owned Petroleos de Venezuela SA, to help Bolivia develop its energy reserves and revitalise the virtually defunct Bolivian state oil company -Yacimientos Petroleros Fiscales de Bolivia.

The foreign companies that invested $3.5 billion in Bolivia since privatisation are now retooling their business plans.

Dozens of large foreign companies operate in Bolivia’s oil and gas field exploration, drilling and services, including Britain’s BG Group PLC and BP PLC; France’s Total SA; and US-based Exxon Mobil Corp, Baker Hughes Inc, Schlumberger Ltd and Halliburton Co.

Pietro Pitts, editor-in-chief for the Venezuela-based LatinPetroleum.com, said all were waiting to see what Morales will do. “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.