Morales seizes Bolivia's gas industry

President Emo Morales seized Bolivia's gas industry, deploying troops to the oil fields. [WaPo]

Speaking yesterday at the San Alberto gas field in the south-east of the country, he ordered the military, including "battalions of engineers", to take immediate control of energy fields. All companies were told to turn production over to the state's Yacimientos Petroliferos Fiscales Bolivianos company, which used to produce the country's natural gas, but was reduced to an administrative capacity in the mid-1990s after Bolivia's gas exploration and production business was privatised. Those that refused to obey the decree would have to leave the country within six months.

Mr Morales said the state would also recover Bolivian hydrocarbon companies that were privatised in the 1990s. Foreign companies will be reduced to operators. [Guardian]

The conventional wisdom among petroleum analysts is that Morales' is using nationalization as a bargaining chip in an attempt to renegotiate more favorable contracts with the private firms companies that extract Bolivia's natural gas.

Congress last year passed a law that obliges foreign energy companies to hand over 50 per cent of their revenues in taxes and royalities. But Mr Garcia indicated that at the two largest gas fields, San Alberto and Sabalo, the split would now be 82-18 in the state's favour.Significantly, both fields are operated by Petrobras and its subsidiaries. Petrobas, the biggest investor in Bolivian sector, is state-owned. Brazil's president Luiz Inácio Lula da Silva has good relations with Mr Morales. "Petrobas is the key to how the negotiations will play out for all the foreign companies in the sector," said one industry insider. [MSN Money]

MSN also reports that Morales was in Havana on Saturday to sign a trade deal with Hugo Chavez and Fidel Castro.

Comments

[Wade]

A grad student in my school's poli sci department is from Bolivia and he writes a lot about this stuff in his blog:
www.centellas.org/miguel

[mudkitty]

Gas is not even a utility, much less a luxury, it's a nessesity.

[AVanGeek]

The good news is that it looks as though some countries in South America are seeing the advantages of continental trade deals. The bad news is they don't want the US involved.