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Bolivia cautiously reaffirms Nov. 1 nationalization deadline

Bolivia cautiously reaffirms Nov. 1 nationalization deadline

Bolivia's oil and gas minister cautiously reaffirmed a Nov. 1 deadline for full nationalization of the South American country's petroleum reserves, but stopped short of saying the timetable would not be changed at a later date.
In his nationalization decree issued May 1, Bolivian President Evo Morales gave foreign oil companies six months to negotiate new contracts ceding majority control of their Bolivian operations to the state or leave the country.
At a Tuesday press conference, Hydrocarbons Minister Carlos Villegas said the Bolivian government is working with "the effort, the intention and the hope" that foreign energy companies would sign new contracts before the cutoff date.
However, he also tacitly acknowledged that the delicate process might require more time.
"The deadline is the end of October, and of course we reaffirm that until the end of October we are going to give it all our effort," Villegas said. "But this is a negotiation, and in a process of negotiation it's very difficult to know the results in advance."
On Monday a congressional commission recommended that the deadline be pushed back 30 to 60 days so that negotiations could continue without pressure. The commission's president said it would formally present its recommendation to Morales on Wednesday.
The proposal came a day after presidential elections in Brazil failed to produce an outright winner, prolonging the uncertainty over contentious talks between Bolivia and Brazil's state energy giant Petroleo Brasileiro SA, or Petrobras, which purchases 70 percent of Bolivia's natural gas output.
Analysts say Bolivia depends greatly on Petrobras' capital and technical know-how to manage what amounts to South America's second-largest gas reserves after Venezuela's, and will likely let negotiations run their course without enforcing the deadline.
"The worst thing you want to do is nationalize, and then before you even finalize all of your contracts say, 'OK this is it, it's over, you've got to get out of here' _ when the government knows they can't do it on their own," said Pietro Pitts, editor in chief of Latin Petroleum magazine. "So whether Petrobras wants to sign next week or in a month, if I were Bolivia, I would wait for Petrobras."
The two nations have been at loggerheads ever since the May 1 decree, and tensions deepened last month when Bolivia's Hydrocarbons Ministry said it would confiscate two massive Petrobras refineries that together process 90 percent of Bolivia's fuel for domestic consumption. The move was quickly rescinded, however.
Bolivia is also seeking to raise the price Brazil pays for its natural gas from US$5 (euro4) per million British thermal units to a figure more in line with international markets.
Sporadic negotiations between the two countries have yet to produce an agreement and became an issue in Brazil's presidential race. Opponents of leftist President Luiz Inacio Lula da Silva, a Morales ally, criticized the country's dependence on Bolivian gas and accused him of being soft in defending Petrobras' Bolivian interests.
Silva was the top vote-getter Sunday but failed to win a majority, forcing him to an Oct. 29 runoff against center-right former Sao Paulo state Gov. Geraldo Alckmin.
While Petrobras remains the biggest investor in Bolivian gas, the Brazilian energy giant has said it has frozen US$2 billion (euro1.6 billion) in future Bolivian investments.
Meanwhile, the Spanish-Argentine firm Repsol YPF has said it has reduced its investments to the bare minimum in response to nationalization.


Updated : 2021-01-17 15:08 GMT+08:00