Bolivia: Nationalization of Natural Resources Shocks Foreign Oil Companies

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Researched by Industrial Info Resources (Sugar Land, Texas). President Evo Morales signed on May 1, 2006, the Decree #28701, placing Bolivia’s energy industry under state control. Even companies such as the Brazilian Petrobras (NYSE:PBR), the Spanish-Argentine Repsol YPF, France’s Total, and British Gas and British Petroleum were given a six-month deadline to renegotiate their contracts immediately. Military forces and Yacimientos Petroliferos Fiscales Bolivianos (Bolivian Oil Company - YPFB) officials took control of two Petrobras refineries and more than 50 gas stations throughout Bolivia in order to enforce the decree.

The newly elected President of Bolivia, Evo Morales, is a great admirer of Fidel Castro, Hugo Chavez, and Che Guevara. He has been known for his pursuit of a leftist government focused on helping the poor. During his campaign, he said he would alleviate poverty by means of the profit Bolivia receives from sales of gas and petroleum. Morales declared that he will personally see to it that all current contracts are renegotiated. For details see related January 10, 2006, news article - Argentina Looks to Bolivia after Abrupt Drop in Natural Gas Reserves.

According to President Morales, renationalizing the industry would not mean expelling foreign operating countries or expropriating foreign property, but the Decree obligates those companies to render all production to the Bolivian state for its commercialization and industrialization. What is more, military forces and YPFB´s officials took control of two refineries (one in Cochabamba and the other one in Santa Cruz, Bolivia) of Petrobras, which controls 14% of the country's overall gas reserves.

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