Bolivia gas under state control

[Manu'sMagicalLeftHand]

http://news.bbc.co.uk/2/hi/americas/4963348.stm

Bolivia's President Evo Morales has signed a decree placing his country's energy industry under state control.

In a May Day speech, he said foreign energy firms must agree to channel all their sales through the Bolivian state, or else leave the country.

He set the firms a six-month deadline, but the military and state energy officials have already started taking control of the oil fields.

Bolivia has South America's second largest natural gas reserves.

But the country has suffered years of political crises over how to develop and profit from the industry.

The main foreign oil firms operating in Bolivia are Brazil's Petrobras, the Spanish-Argentine company Repsol YPF, British companies British Gas and British Petroleum and France's Total.

High energy prices

Speaking at an oilfield in the south of the country, Bolivia's left-wing president called it an "historic day".

"The pillage of our natural resources by foreign companies is over," he declared.

He said the companies had six months to re-negotiate their contracts and urged them to "respect the dignity of Bolivians".

Foreign companies would receive 18% of oil and gas revenues during the transition period, reports said.

Vice President Alvaro Garcia said the military and officials from the state energy firm YPFB moved to take control of 53 energy installations - including gas fields, pipelines and refineries - immediately after the decree was signed.

There was no immediate word from the foreign energy companies themselves.

The firms will get less favourable terms but current high global energy prices may be an incentive to see if they can work with Mr Morales, the BBC's Americas editor Simon Watts says.

Friendly meetings

Mr Morales swept to victory as Bolivia's first indigenous president in January elections after vowing to "recover" the country's natural resources by renationalising them.

However, he has shown signs of pragmatism since coming to office, and has held friendly meetings with several oil bosses.

On a visit to Brazil in January he said renationalising the industry would not mean expelling foreign companies or expropriating foreign property.

"Foreign companies have every right to recover investments and make profits, but profits should be balanced," he told a press conference at the time.

Petrobras is one of Bolivia's largest foreign investors, controlling 14% of the country's gas reserves.

http://newsimg.bbc.co.uk/media/images/41623000/jpg/_41623458_bolivia203ap.jpg
Bolivians celebrate after Mr Morales' announcement

http://newsimg.bbc.co.uk/media/images/41244000/jpg/_41244492_morap.jpg
"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources" Evo Morales - Bolivian President

More sources:
http://www.usatoday.com/money/world/2006-05-01-bolivia_x.htm
http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nN01189881&imageid=&cap=
http://www.miami.com/mld/miamiherald/14475037.htm
http://www.nytimes.com/2006/05/01/world/americas/01cnd-bolivia.html?hp&ex=1146542400&en=7011d6fe62928beb&ei=5094&partner=homepage
http://abcnews.go.com/International/wireStory?id=1910914

[smeagol]

Fucking demagog.

Our continent will never learn, and therefore, will never rise out of poverty. Even with an international environment which can not be more favorable to our economies, we keep messing it up with these fucking moronic presidents we elect.

Kirchner, Chavez, Morales . . . Umala or Garcia in Peru. All a bunch of uneduacted morons.

Why the fuck can´t we learn from the Chileans?

[velik_m]

smart move, though i would guess unpopular with some countries. He will have to watch his back.

[smeagol]

smart move.

Huh?

Are you kidding?

[velik_m]

for him

[Vashner]

With his new policy on cocaine (stopping enforcement basically) too he is going to be well protected too from the local drug lords.

This guy is quickly becoming very powerfull.

[boutons_]

Bolivia takeover alarms powerful allies

By Robert Plummer
BBC News business reporter

Anyone who seriously believed that Latin America's various left-leaning leaders all thought alike will have been puzzled by the fallout from Bolivia's nationalisation of its vast natural gas fields.

For the most anguished reaction to President Evo Morales' move has come from a country that might have been considered one of his staunch natural allies - Brazil.

Less than four months ago, in the run-up to Mr Morales' inauguration, he and Brazil's President Luis Inacio Lula da Silva were seen smiling for the cameras after discussing co-operation in the energy sector.

Mr Morales came to Brasilia with a track record of activism as a former coca-growers' union leader, as well as a commitment to economic reforms that would benefit Bolivia's impoverished indigenous majority.


==================
BOLIVIA'S NATURAL GAS

Volume: 1,529bn cubic metres (54 trillion cubic feet) of proven and probable gas reserves

Theoretical value: $70bn

Second-largest reserves in Latin America (after Venezuela)

Bolivian GDP in 2005: $8.5bn ($940 per capita)
=======================

But at the same time, he needed to reassure Brazilian investors - especially Brazil's state-owned oil and gas giant, Petrobras - that he would take a business-friendly approach.

Petrobras, which has invested more than $1bn in Bolivia and controls 45% of its gas production, was duly placated. The company's boss, Jose Sergio Gabrielli, said he expected an excellent business climate under Mr Morales.

Betrayal

Now the mood in Brazil is one of betrayal and humiliation.

Mr Gabrielli has described the decree as "unfriendly" and declared that Petrobras will review its activity in Bolivia.

Lula promptly called an emergency cabinet meeting to examine the move.

And an unnamed close adviser to Lula was quoted in the Brazilian press as saying that the government had been "caught with its pants down" over the military's seizure of facilities including Petrobras' refinery in the eastern city of Santa Cruz.

Brazil is not alone in its dismay. The Spanish foreign ministry has expressed "deep concern" about the implications for Spanish energy group Repsol-YPF, which controls 25.7% of Bolivia's gas production.

In all, about 20 foreign companies are affected, including BP, British Gas, ExxonMobil and Total.

Punitive terms?

Under the terms of the nationalisation, they are required to agree new contracts with the state-run firm, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 180 days.

In the meantime, Bolivia will keep up to 82% of their revenues, allowing them just the remaining 18%.

Unsurprisingly, many of these firms are now wondering whether it is worth continuing to invest in Bolivia at all - and other foreign firms may also be deterred.

If the move marks a clear break between Mr Morales and Lula, it also draws him closer to the more radical approach of President Hugo Chavez in Venezuela, where oil firms are being pressed to change their operations into joint ventures with the state firm PDVSA.

Just days before the Bolivian decree was issued, Mr Morales and Mr Chavez visited Havana to sign a three-way trade pact with Cuban President Fidel Castro.

Blessing or curse?

Mr Morales announced the nationalisation as an end to what he called "the pillage of our natural resources by foreign companies".

In this, he was reflecting the traditional view of Latin American economic nationalists that a country must retain control over its natural assets at all costs.

That perception is particularly acute in Bolivia, where the indigenous majority feel that the economy is run for the benefit of a wealthy elite who have allowed foreigners to exploit their silver, tin, oil and gas reserves.

The move is the latest chapter in the increasingly tortured saga of Bolivia's huge gas reserves - bigger than those of any other Latin American country except Venezuela.

What should have been an economic blessing to one of the poorest nations in the region has, instead, turned into something of a curse.

Plans to export the gas to the US and Mexico sparked fury among indigenous protesters and led to the downfall of President Gonzalo Sanchez de Lozada's government in 2003.

Adding to their anger, the scheme would have involved shipping the gas via a Chilean port - an outlet that used to be part of Bolivian territory until Chile seized Bolivia's coastline in their 1879-83 war.

With no pipeline to the Pacific Ocean in place, landlocked Bolivia has been selling gas to neighbouring Brazil and Argentina instead.

This makes Brazil not only Bolivia's biggest investor, but also its biggest customer - and therefore a country that it might be unwise to alienate.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4964432.stm

Published: 2006/05/02 12:08:59 GMT

© BBC MMVI

[scott]

http://upload.wikimedia.org/wikipedia/en/3/31/Atlas_shrugged_cover.jpg

[Nbadan]

With the Chinese, Indians, Japan and Asia looking for extra gas reserves to drive their economies, Bolivia figures it can get a better price on it's own, at least keep more of the profits from it's oil, but nationalization leads to inefficiency in the market as foreign companies that get the oil out of the ground debate how much to reinvest in Bolivia, and the Bolivian government spends money to verticle intergrate like Venezuela. This is why nationalization is a net negative for the Bolivians, at least in the short run, and for the world petroleum supply. More nationalization leads to higer prices.

[xrayzebra]

Just take a look to the South, Mexico. Their oil industry is so screwed up it's
piteful. And it is not beyond the realm of possibility that they will go to the far
left in their next election.

[exstatic]

Fucking demagog.

Our continent will never learn, and therefore, will never rise out of poverty. Even with an international environment which can not be more favorable to our economies, we keep messing it up with these fucking moronic presidents we elect.

Kirchner, Chavez, Morales . . . Umala or Garcia in Peru. All a bunch of uneduacted morons.

Why the fuck can´t we learn from the Chileans?
Yeah, the Saudis really made a mistake when they nationalized their oil, didn't they? Fucking trillionaires, all of them.

[Nbadan]

Yeah, the Saudis really made a mistake when they nationalized their oil, didn't they? Fucking trillionaires, all of them.

:lol

If you've got oil, socialism, or in Saudi Arabia's case, fascism, works!

[smeagol]

Yeah, the Saudis really made a mistake when they nationalized their oil, didn't they? Fucking trillionaires, all of them.
Huh?

I'm talking about the people. Who the fuck cares about how the rulers did. Are the Saudis better off with their natural resources nationalized? Will the Bolivians come out of poverty because of the policies of this moron?

I think not.

[Manu'sMagicalLeftHand]

Huh?

I'm talking about the people. Who the fuck cares about how the rulers did. Are the Saudis better off with their natural resources nationalized? Will the Bolivians come out of poverty because of the policies of this moron?

I think not.

So what would you do? Leave everything as it was? Foreign companies with minimum investment, taking no risks, paying very low wages, taking huge profits out of the country, all supported by a favourable (or lack of) laws and control from the state? As a Latin American, you should know where that has lead us into.

I don't think this is such a bad move, if the Bolivian state is able to run the energy system efficiently, and more importantly, reduce the cost so that every Bolivian has access, it could be a sample that State-run companies are good competititon to private capital. That could trigger other countries in the zone to start putting pressure on foreign corporations who aren't willing to take risks, make investments, pay good salaries to qualified workers, work inside the law, and accept competition and free trade. Those are supposed to be the basics of capitalism, but they don't seem to be applied in Latin America.

[xrayzebra]

So what would you do? Leave everything as it was? Foreign companies with minimum investment, taking no risks, paying very low wages, taking huge profits out of the country, all supported by a favourable (or lack of) laws and control from the state? As a Latin American, you should know where that has lead us into.

I don't think this is such a bad move, if the Bolivian state is able to run the energy system efficiently, and more importantly, reduce the cost so that every Bolivian has access, it could be a sample that State-run companies are good competititon to private capital. That could trigger other countries in the zone to start putting pressure on foreign corporations who aren't willing to take risks, make investments, pay good salaries to qualified workers, work inside the law, and accept competition and free trade. Those are supposed to be the basics of capitalism, but they don't seem to be applied in Latin America.

Oh, I would love to talk to you in ten years if I am around. I truely would.
You will see how much access "every Bolivian" has to anything.

[Manu'sMagicalLeftHand]

Oh, I would love to talk to you in ten years if I am around. I truely would.
You will see how much access "every Bolivian" has to anything.


So what would you do? Leave everything as it was? Foreign companies with minimum investment, taking no risks, paying very low wages, taking huge profits out of the country, all supported by a favourable (or lack of) laws and control from the state? As a Latin American, you should know where that has lead us into.

I don't think this is such a bad move, if the Bolivian state is able to run the energy system efficiently, and more importantly, reduce the cost so that every Bolivian has access, it could be a sample that State-run companies are good competititon to private capital. That could trigger other countries in the zone to start putting pressure on foreign corporations who aren't willing to take risks, make investments, pay good salaries to qualified workers, work inside the law, and accept competition and free trade. Those are supposed to be the basics of capitalism, but they don't seem to be applied in Latin America.

Definition

<– Back to results
if (IN THAT SITUATION)
conjunction
1 used to say that a particular thing can or will happen only after something else happens or becomes true:
I'll pay you double if you get the work finished by Friday.
We'll have the party in the garden if the weather's good. If not (= If the weather is not good), it'll have to be inside.
If anyone rings for me, please tell them I'll be back in the office at 4 o'clock.
If she hadn't called, I wouldn't have known.
I wouldn't work for them (even) if they paid me twice my current salary.
We'll deal with that problem if and when it arises.
If disturbed, the bird may abandon the nest, leaving the chicks to die.

[smeagol]

MMLH, do you recall when YPF used to be state-owned? It used to lose US$1MM a day.

Governments should not own entire industries because they screw things up. I thought in LatAm we had learned our lesson. Unfortunately, goofballs such as Morales, Chavez and Kirchner came along, who want to take us back to the 70s.

At the end of the day, we have the governemnts we deserve.

[Sec24Row7]

I would be very suprised if Bolivia was making less than 40-50% of the gross income off their reserves before.

That's a lot of money for winning the geologic lottery.

To put it in perspective, the best oil deal that a landowner in the states can get for the most part is a quarter royalty or 25% of the gross production sales.

[Manu'sMagicalLeftHand]

MMLH, do you recall when YPF used to be state-owned? It used to lose US$1MM a day.

Governments should not own entire industries because they screw things up. I thought in LatAm we had learned our lesson. Unfortunately, goofballs such as Morales, Chavez and Kirchner came along, who want to take us back to the 70s.

At the end of the day, we have the governemnts we deserve.

And do you recall what happened when those industries were privatized?

They became efficient and profitable, but only for the foreign capital, which took no risks, made minimum invesment, received already existing structure and goods, were allowed to monopoly the markets, paid (and still do) low wages, benefited from work flexibilization laws, and they worked outside costumers rights laws. The services became more efficient, but only to those able to afford them, who were less and less each year. And it wasn't just oil and gas, it was water, phones, health, public transport, international fleets of ships and aircrafts, etc., all were given away in ridiculous contracts. What has that left to the countries who were supposed to enjoy the so called benefits of foreign invesment? Just look at the entire region in the (roughly) 1975-1998 period, it was the same in every country. Some countries did apply control over the private sector (Chile, Uruguay), and they were the ones that didn't end in a total chaos, the other now have around 50% of their populations under the poverty line.

The problem isn't state-run companies. The competition they provide (as long as they are well ran) is good to avoid monopolic practices. The real problem is the necessary control that the State should make over this companies. As long as we keep allowing corporations to do as they please over the law, we will never grow as a region. They want to open markets and invest here? Fine, always under the law, investing in required areas, accepting competition and risks, two supposed "holy laws" of capitalism. The multinationals would still make a huge profit in those conditions, but it seems for some that if they don't take 400% profits out of their minimum investment, it isn't good business. You can't leave a country's entire economic growth on the private sector, it just doesn't work. Many people will be left behind, and it will be 2000-2001 all over again.

Back to the 70's you say? That was in the 90's, when the economic policies of the 70's dictatorships were taken into the extreme by the neoliberals. I'm no fan of Chavez or Kirchner's populisms, I consider them to play only for their own political power, but if I had to choose with a gun in my head between them and Menem or De La Rua, I wouldn't think about it twice.

[Manu'sMagicalLeftHand]

I would be very suprised if Bolivia was making less than 40-50% of the gross income off their reserves before.

That's a lot of money for winning the geologic lottery.

To put it in perspective, the best oil deal that a landowner in the states can get for the most part is a quarter royalty or 25% of the gross production sales.

That's the problem right there. In the States, the landowner is American. The money remains in America, and he will spend it in the American economy. That makes the economy work. How many foreign companies own American resources?

In Latin America, those resources were given away almost for free to foreign companies. All the profits were destined to the countries where those companies had their headquarters. Those that weren't, remained in the hands of an Oligarchy that didn't care about their own country, and sent their money to foreign banks, or invested in foreign shares or goods.

[DarkReign]

That's the problem right there. In the States, the landowner is American. The money remains in America, and he will spend it in the American economy. That makes the economy work. How many foreign companies own American resources?

One would be appalled at the amount of foreign companies and investment houses that control many aspects of American economic status.

Basically, China has bought a vast amount of the capital in banks that lend money to this new record setting home ownership boom.

In essence, China holds millions of mortgages for millions of Americans. So really, who owns the land in these cases?

Oil companies...not so sure. But I just wanted to chime in on the "foreign companies" thing. I dont pretend to know enough about the topic to speak intelligently on the pros and cons of it all. But, as with any government, they tend to fuck things up more than anything else.

[xrayzebra]

Definition

<– Back to results
if (IN THAT SITUATION)
conjunction
1 used to say that a particular thing can or will happen only after something else happens or becomes true:
I'll pay you double if you get the work finished by Friday.
We'll have the party in the garden if the weather's good. If not (= If the weather is not good), it'll have to be inside.
If anyone rings for me, please tell them I'll be back in the office at 4 o'clock.
If she hadn't called, I wouldn't have known.
I wouldn't work for them (even) if they paid me twice my current salary.
We'll deal with that problem if and when it arises.
If disturbed, the bird may abandon the nest, leaving the chicks to die.

If a frog had wings he wouldn't bump his butt too. Just call me in ten years.

:lol

[Sec24Row7]

That's the problem right there. In the States, the landowner is American. The money remains in America, and he will spend it in the American economy. That makes the economy work. How many foreign companies own American resources?

In Latin America, those resources were given away almost for free to foreign companies. All the profits were destined to the countries where those companies had their headquarters. Those that weren't, remained in the hands of an Oligarchy that didn't care about their own country, and sent their money to foreign banks, or invested in foreign shares or goods.

Foreign Oil companies own large amounts of leasholds in the united states and the number is growing. Onshore production in North America is the most favored production in the world, not because of the production rates, but because of the stability of the government.

What many people fail to understand, is that the risk of oil discovery in many countries is far less than the risk of government restructure or the possible peril to production infrastructure.

As for given away for free to foreign companies, get off of it. Don't blame the companies, blame the government for taking the mineral rights from their landowners. I garuntee you they would have gotten much better prices had you not been socialist to begin with and taken it away from the people that owned the land the oil & gas production came from.

[smeagol]

And do you recall what happened when those industries were privatized?

Yes. They were no longer a drain to the state’s finances. They stopped being a bottomless pit of corruption. They actually became efficient. What a terrible thing!

Were you alive in the 80s? Do you recall those days when it took Entel years to install a telephone line in your home? (unless you knew somebody, who knew somebody who worked in the government, then and only then it would take days). In the mid 90s it took Telefonica de Argentina and Telecom Argentina only hours to install that same line.

Do you remember those magical summers where there was no electricity, or winters where there was no gas, because our state-owned utilities had no resources to provide the basic minimum service they should provide to its population?

Yes, I recall life before privatizations, and life after them.


They became efficient and profitable, but only for the foreign capital

I see you blindly swallow the rhetoric being fed by our leftist politicians, who have mushroomed like a bad weed over the last five years, and by our biased media.

Privatizations benefited everyone. Do you remember when a certain president of ours, back in 1989, asked the population to unscrew some light bulbs in the house because Segba was unable to meet the electricity demand? Remind me again how many electricity shortages occurred after the Segba privatization. Remind me again how many telephone lines were installed in 1989 and how many were installed in 1999. And don’t even get me started on how long it took to make an overseas phone call in the 80s. Once, I remember being on the phone for hours just to talk to my girlfriend who was on vacation in the States.


which took no risks,

Buyers of state-owned companies took huge risks. They paid large amounts of money in a country that offered no security. They put their capital at risk. And by the way, they were not all foreign. Perez Companc, Techint, Loam Negra, Comercial del Plata, Pescarmona, Benito Roggio and many others participated in the privatization process.

What you saw in the 90s was a lack of control by the government and that is not the companies’ fault, but the states fault.


made minimum investment

Please educate yourself before spewing such nonsense. The amount of capital expenditure plans these companies embarked themselves in was enormous. I know this for a fact because I worked for a bank and saw the Balance Sheets of these companies. Year after year they modernized this companies from what they were in the 80s, a piece of shit, to what they became in the 90s, decent service companies which compared very well to other countries' public service companies.



received already existing structure and goods

In a privatization there is always existing structure. The key is in what state that structure was sold. In the case of Argentina, the infrastructure was in a dreadful condition. And the companies that took over turned that situation around.



were allowed to monopoly the markets,

Explain to me how many gas pipes do you want coming to your house? Or how many high voltage lines, for that matter? Those are natural monopolies and there is not much that can be done about it. In other industries, such as oil, steel and telephony, privatized companies compete just like in any other country of the World.


paid (and still do) low wages,

And the public servants earn sooooo much more. Are you fucking kidding me?



benefited from work flexibilization laws

You have been brainwashed, man. Our work laws are the most rigid in the world. Go ask the Americans what it takes to receive a pink slip in the US and how much they get paid when they are fired. You really need to stop watching TV and inform yourself.


and they worked outside costumers rights laws.

What does this mean?


The services became more efficient, but only to those able to afford them, who were less and less each year.

Bullshit. Telephone installation became affordable to everyone. No electricity and gas cuts benefited everybody. The fact the state did not meddle in every sector of the economy, and losing money int he process, was a benefit to all Argentines.



And it wasn't just oil and gas, it was water, phones, health, public transport, international fleets of ships and aircrafts, etc., all were given away in ridiculous contracts.

Some privatizations were better than others. All in all they were a good thing. The problem was the government officials taking bribes and stealing the money. And the lack of controls (in some cases, such as highways, AA, but ceratinaly not in all cases).



What has that left to the countries who were supposed to enjoy the so called benefits of foreign invesment? Just look at the entire region in the (roughly) 1975-1998 period, it was the same in every country. Some countries did apply control over the private sector (Chile, Uruguay), and they were the ones that didn't end in a total chaos, the other now have around 50% of their populations under the poverty line.

Privatizations have nothing to do with the chaos that Argentina went through in late 2001. Privatizations were good for the country.

It’s a good thing you bring up Chile, a country that has privatized everything except oil and copper production and is doing just fine.


The problem isn't state-run companies. The competition they provide (as long as they are well ran) is good to avoid monopolic practices.

State run companies are by default more inefficient than private companies. State owned companies are monopolistic all over LatAm. Simply look at PEMEX or CFE in Mexico, or PDVSA in Venezuela, and then get back to me.



The real problem is the necessary control that the State should make over this companies. As long as we keep allowing corporations to do as they please over the law, we will never grow as a region.

This I agree with.



They want to open markets and invest here? Fine, always under the law, investing in required areas, accepting competition and risks, two supposed "holy laws" of capitalism.

This is what happened in the Argentine case. Please show me where privatized companies don’t compete. YPF competes, the wireless companies compete, so do the basic telephony companies, so do the power generation companies, so do the steel mills, etc, etc, etc.


The multinationals would still make a huge profit in those conditions, but it seems for some that if they don't take 400% profits out of their minimum investment, it isn't good business.

This is coming out of your ass. Who is your source?



Back to the 70's you say? That was in the 90's, when the economic policies of the 70's dictatorships were taken into the extreme by the neoliberals. I'm no fan of Chavez or Kirchner's populisms, I consider them to play only for their own political power, but if I had to choose with a gun in my head between them and Menem or De La Rua, I wouldn't think about it twice.

The mistakes of the 90s were: 1) Not dropping the dollar peg sooner (1996), 2) Taking on too much debt, and 3) Menem was a fucking crook.

[Nbadan]

More Tough talk from Bolivian President Morales

Defiant Morales says exploitation of Bolivia is over
By Reuters, Vienna, May 11


Bolivia’s new left-wing leader, Evo Morales, started his first visit to Europe as president on Thursday with a vow to end what he said were centuries of foreign “pillaging” of his country.

Arriving at a summit of European and Latin American leaders in Vienna, former labour activist Morales was in no mood to bow to pressure to compensate firms including Spain’s Repsol, Britain’s BG and France’s Total for his nationalisation of their Bolivian operations on May 1.

“For more than 500 years our natural resources have been pillaged and our primary goods exported. This has to be ended now,” said Morales, who won December elections promising to use the country’s natural resources to help the poor majority.

Companies should only be compensated for assets taken over by the state, but not for loss of operating concessions as long as they have recouped their investments via profits, he said.

News (http://news.ft.com/cms/s/f07fcaf0-e0fd-11da-90ad-0000779e2340,_i_rssPage=80fdaff6-cbe5-11d7-81c6-0820abe49a01.html)