Bolivia Nationalizes
Natural Gas with Support from Venezuela
Bolivian President Evo
Morales chose May 1 to issue a decree nationalizing the Bolivian natural gas
industry. “The time has come, the awaited day, a historic day in which Bolivia retakes
absolute control of our natural resources,” he said.“The looting by the foreign companies has
ended.”
Morales made the announcement the day
after returning from a joint meeting in Havana
with Cuban President Fidel Castro and Venezuelan President Hugo Chavez.Morales became the third Latin American
leader to sign on to the Bolivarian Trade Agreement of the Americas (ALBA),
which Cuba and Venezuela have proposed as a counter to the U.S. sponsored Free Trade Agreement of the Americas.
Speaking from San Alberto, one of the country’s two largest natural gas fields,
which is currently owned and operated by Petrobras
(of Brazil) with some involvement by the Spanish multinational Repsol YPF and the French multinational Total SA, the
president declared that Bolivia’s wealth would once again belong to
Bolivians.
“The state reclaims the property, the
possession and the total and absolute control of these resources,” states
Article 1 of the decree.Article 2
states that as of May 1, all petroleum companies in Bolivia currently active in the
production of gas or petroleum must hand over to YPFB, the Bolivian state oil
company, 82 percent of the value of all production of hydrocarbons.As well, by July 1, the YPFB will have taken
over control of all oil and gas production, exploration and distribution and
within six months, all companies involved in the hydrocarbon industry in Bolivia
will be required to sign nationalization agreements with the Bolivian state, or
be asked to leave the country.
Nationalization of the country’s natural
gas resources was one of the key electoral promises Morales’ Movement Towards Socialism (MAS) party was elected on in December 2005,
with an unprecedented 54 percent of the popular vote.The election of MAS followed a wave of mass
mobilizations throughout the countryside after the previous government failed
to act on the results of a 2004 referendum, in which 94 percent of Bolivians
voted in favour of nationalizing natural gas production.
Simply by increasing from 50 to 82 per
cent the value on all gas or petroleum production, the May decree almost
doubles the monies collected by Bolivia from the industry – to $760 million
(U.S.) from the $440 million collected in 2005.According to YPFB president Jorge Alvarado, even receiving only 18 per
cent of the value of gas being produced, the large energy conglomerates
operating in Bolivia
can expect profit rates of up to 25 percent, as natural gas and oil prices have
risen threefold over the past five years.
Bolivia, the poorest country in Latin America,
has the second largest natural gas reserves on the continent, second only to Venezuela.YPFB was first created in 1937, and by 1940,
the state-run company was producing 882,000 barrels of oil per year, more than
Standard Oil had produced in 15 years of operation in Bolivia.By 1953, YPFB was producing enough oil to
take care of all national consumption needs and between 1985 and 1995, YPFB was
the source of over 50 per cent of all state revenues in the country.
However, the industry was privatized in
1996, following intense pressure from the IMF and World Bank, which declared that
the Bolivian economy would continue to “stagnate” without massively increasing
foreign investment in the industry.Since
privatization, billions of dollars worth of natural gas has been extracted from
the country by a handful of conglomerates and sold to neighbourhing countries,
particularly Brazil, Argentina and Chile.During this same time, these companies have
invested next to nothing in further developing the Bolivian infrastructure for
the export of natural gas. Nor has there be any investment during this period
in developing the infrastructure for the internal use of natural gas, which
could be processed within Bolivia
and used to produce everything from fertilizer to plastics to electricity.While an estimated 80 percent of Bolivian
households do not have access to natural gas or electricity in their kitchens,
connecting every kitchen in the country to natural gas would only use up about
1.5 per cent of the country’s reserve.
The reaction to the nationalization from
the handful of foreign companies who have controlled Bolivia’s
natural gas for the last decade was swift, with expressions of “deep concern”
from France and Spain.However, the Brazilian government reacted by
saying it would “monitor the situation closely” and has since invited Morales, Chavez
and Argentinian President Nestor Kirchener to an August 2006 summit to discuss
continental energy issues.
On May 26, Morales and Chavez signed
their first agreement under ALBA, creating a joint mining company, Minesur, and a fertilizer company, Fertisur.
At the same time Venezuela
pledged to invest some $500 million in YPFB’s efforts to modernize Bolivia’s
natural gas infrastructure.
Reacting to the nationalization decree,
which was supported by 94 percent of the Bolivian population, U.S. President
George Bush said on May 22 that he was “concerned about the erosion of
democracy” in Bolivia and Venezuela.