Monday, May 01, 2006

Bolivia Nationalizes Gas Industry

Wall Street Journal
May 1, 2006

Bolivia nationalized its natural gas industry on Monday, ordering all foreign energy companies to send their supplies to Yacimientos Petroliferos Fiscales Bolivianos, a state company responsible for sales and industrialization. President Evo Morales spoke from a facility owned by Brazil’s Petroleo Brasileiro SA (Petrobras) and Spanish-Argentine’s Repsol YPF, and stated: "The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources."

Mr. Morales further warned that companies which did not follow the decree would have to leave Bolivia within six months. The companies mostly affected by this nationalization of oil are Petrobras, Repsol, British Gas, Britain’s BP PLC, and France’s Total SA. In addition to natural gas companies, Bolivia also plans to retake control of hydrocarbons companies that were privatized in the 1990s by taking over shares that belong to foreign companies as well as semipublic Bolivian entities.

This decision is closely in line with Mr. Morale’s campaign platform “to wring greater profits from the gas producers doing business in Bolivia, which has South America’s second-largest reserves after Venezuela.” Last year, in efforts to speed the nationalization process, “Bolivia's congress passed a law that raised taxes and royalties on gas production and recognized the state as the sole owner of hydrocarbon resources.”

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