<font size="5"><center>
Bolivian military seizes oil, gas fields</font size>
<font size="4">President says foreign firms must renegotiate their contracts</font size></center>
Bolivia's President Evo Morales, right, accompanied by Vice President Alvaro
Garcia, wave from the balcony of the presidential palace in La Paz on
Monday. Morales ordered soldiers to occupy Bolivia's natural gas fields and
threatened to evict foreign companies unless they give Bolivia control over
the entire chain of production. JUAN KARITA: AP
Houston Chronicle
By JOHN OTIS and DAVID IVANOVICH
Copyright 2006 Houston Chronicle
BOGOTA, COLOMBIA - Making good on his main campaign pledge, Bolivia's President Evo Morales ordered troops to occupy the country's oil and natural gas fields on Monday and issued a decree giving the government majority control over the energy industry.
"The pillaging of our resources by transnational companies is over," Morales said in a speech at the San Alberto gas field in southern Bolivia. "From this day forward, all hydrocarbons in the country are nationalized."
Morales, a leftist who was elected in December, ordered troops to 56 locations around the country, officials said, including to the city of Santa Cruz where much of the industry is based. He issued a decree that stopped short of expropriation but ordered foreign companies to renegotiate their operating contracts with the state within six months or leave the country.
The decree raised taxes and royalties on the largest gas fields to 82 percent from 50 percent. And it gave the government final say in decisions over production, transportation, commercialization and exports of oil and natural gas.
An Aymara Indian who has allied himself with Presidents Hugo Chavez of Venezuela and Fidel Castro of Cuba on economic issues, Morales has long accused international energy companies of cheating the Bolivian people. Bolivia, one of Latin America's poorest countries, has the second-largest proven natural gas reserves in Latin America after Venezuela, 26.7 trillion cubic feet.
The energy companies operating in Bolivia include Britain's BG Group and BP, Brazil's Petrobras, Spanish-Argentine Repsol-YPF, France's Total, and U.S.-based Exxon Mobil Corp.
Petrobras is ranked as the country's largest gas producer and Repsol-YPF held the largest amount of reserves, according to the U.S. Energy Information Administration.
Exxon Mobil spokesman Bob Davis said company executives were monitoring developments but could not comment further.
The corporation, however, have been wary of further investment in Bolivia for some time. A year ago, Bolivia's Congress approved a new hydrocarbons law, which Morales cited as the basis for Monday's decrees. The law was designed to open the door to greater state intervention in the energy sector, following a wave of privatizations in the 1990s.
"From Exxon Mobil's perspective, this is small potatoes," said Charles Esser, an industry economist in Washington for the Energy Information Administration.
While Bolivian officials have been talking about a possible nationalization of the country's energy assets for some time, Esser was still surprised by Morales' announcement.
"Certainly, there's been a lot of talk about it, but I thought perhaps the Argentines and the Brazilians would persuade him to take some middle path because they're the most exposed," Esser said. "We, the United States, aren't importing any natural gas from Bolivia. Most of the exports are going to Brazil, with a smaller amount going into Argentina."
Though dramatic, the deployment of troops to guard all of the country's gas fields as well as oil refineries and pipelines was widely viewed as a gesture symbolizing that the installations now belong to the Bolivian state. But the military presence could also nudge foreign firms into complying with the decree, analysts said.
In addition, government engineers were prepared to take over day-to-day administration and to maintain production levels should any of the companies defy the decree, said Bolivian economist Gonzalo Chavez.
Wearing a white helmet from Bolivia's state-owned energy company known by its Spanish acronym YPFB, Morales issued the decree on his 100th day in office in a nationally televised address. As he spoke, workers hung a banner over a gas installation in the background that said: "Nationalized: Property of the Bolivian people."
Although the timing of the decree caught many analysts and energy company executives off guard, a government push for more control of the sector had long been expected.
Across much of Latin America, governments are seeking a bigger piece of the pie amid rising prices for oil and natural gas and, in some cases, control of the oil and gas fields. In Venezuela, President Chavez has increased taxes and royalties and forced international companies to sign new contracts. In Peru, presidential candidate Ollanta Humala has talked of taking similar actions if he wins election on May 28.
"Symbolically and politically, it has a very strong impact," said Chavez, the economist. "But the theme of nationalization was central to Evo's campaign and is the main issue of his government."
In La Paz, the Bolivian capital city, Morales' announcement was greeted with praise on the streets. "This is a great advance for Bolivianos," said Juan Tapia, 30, a street vendor. "We have been waiting for years for this to happen, and now it has."
Special correspondent Jean Friedman-Rudovsky contributed from La Paz, Bolivia, and Ivanovich reported from Washington.
john.otis@chron.com david.ivanovich@chron.com
http://www.chron.com/disp/story.mpl/world/3833479.html
