H08910
Headlines : InternationalMorales Progresses, Capitalists Tremble
Evo Morales is making waves by putting his resources in the bands of the Bolivian state rather than the small clique of capitalists. Investors are worried that if the people choose their own destiny, they might not be able to profit from their back-breaking labor.
[Posted By atrain]Republished from International Herald Tribune
MADRID, May 2 — A decision by President Evo Morales of Bolivia to place the nation’s oil and gas reserves under state control raised concerns among investors and European governments whose companies have substantial operations there.
While the move is unlikely to cause companies to significantly reduce operations in Bolivia, it is sure to lower their profits and to put any plans for future investment there in limbo, according to analysts. “New investments are likely off the table,” Bear Stearns said in a report issued today.In announcing his decision on Monday, Mr. Morales said that foreign companies must leave the country unless they agree to negotiate new contracts with the government that would require that all oil and gas sales be funneled through Bolivia’s state owned oil company.
It is unclear what the exact terms of the new contracts will be, but they are expected to demand that a higher percentage of oil and gas revenues remain in Bolivia.
Analysts said that companies were likely to accept the conditions rather than pull out of the country, citing the hefty investments that energy companies like Repsol of Spain and Petrobras of Brazil have already made in the Bolivia.
“For companies to pull out would…
Posted by atrain
Ari Paul has written for The American Prospect, In These Times, Tikkun, Z, Punk Planet, openDemocracy.net, Reason and other newspapers and magazines. He is also a reporter for The Chief-Leader, a New York weekly covering labor in the city.
Presidents to meet over gas crisis in Bolivia
Spain is angry, after having invested over $1 billion in Bolivian gas…
here’s an exerpt:
Outside South America, the reaction to Bolivia’s action has been more hostile. A “deeply concerned” Spain warned that nationalisation would have “consequences [for] the bilateral relationship”, a threat that could lead to the ending of debt relief.
Repsol YPF, the Spanish energy group that has invested more than $1bn in Bolivian gas production, Brazil’s Petrobras, also a big investor, and other international oil companies could be forced to write off their Bolivian gas reserves, analysts said.
Repsol has already been forced to reduce its reserves this year by a quarter because of legal changes in Latin American countries.
Reacting angrily to Mr Morales’ decision to seize control of gas fields using troops and annul existing contracts, Antonio Brufau, Repsol’s chairman, told Argentine radio: “We were told there would be time for negotiations, but obviously this was not the case.”
Anouk Honoré, natural gas analyst at the Oxford Institute for Energy Studies, added: “Bolivia has already a bad reputation among oil companies and some of them are going to leave the country.” She predicted that BG and BP of Britain would be likely walk away from Bolivia.
go morales! now he just needs to figure out a way to keep the petroleum flowing without the aid of the oil companies, and then distribute the largess. i wish him well
“New investments are likely off the table,””
I’m a bit apprehensive about all this. Mexico’s oil and gas state-owned program, Pemex, is a fucking mess.
I mean, I highly doubt Pemex would be such a disaster if it wasn’t state-owned.
Pemex has the same problem most Mexican institutions have. They are extremely prone to corruption. Politically and economically Mexico is very reminiscent of 1920-30’s america.
The corruption leads to inefficieny just like in a corrupt corporation, enron comes to mind.
It is not being state-owned that is the issue. There are plenty of state-run companies that run very well.