Petrobras to Sell Stakes in Refineries in Bolivia

---

Researched by Industrial Info Resources (Sugar Land, Texas). Petrobras, Brazil’s state owned oil company which controls 14% of the Bolivia’s overall gas reserves, offered Bolivian authorities its stake in the 40,000 barrels per day (bpd) Gualberto Villaroel, located in Cochabamba, and the 20,000 bpd Guillermo Elder Bell refineries in Santa Cruz.

On May 1, 2006, President Evo Morales signed a decree placing Bolivia’s energy industry under state control. 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. At that time, military forces and YPFB´s officials took control of Petrobras’ refineries, which had been privatized by President Banzer’s government in 1999 and sold to Brazil’s state company for $104 million. For details, view related May 2, 2006 article - Bolivia: Nationalization of Natural Resources Shocks Foreign Oil Companies. What is more, from May 2, 2006 on, YPFB is in charge of running the country’s oil and gas pipelines, domestic sales and exports.

Since President Morales decided to recover state control in May 2006, Petrobras has been seeking arbitration to establish fair compensation for its two Bolivian refineries taken over by YPFB with no luck. As a consequence of this, Brazil’s state owned company has decided to sell its assets in those refineries and asked for $160 million for them; however, YPFB offered $60 million. According to Petrobras, if no deal is reached, the company will appeal to international courts.

Brazil’s Mines and Energy Minister, Silas Rondeau, stated that the government is upset and totally disappointed with Bolivia’s decision. However, Evo Morales knows Bolivia holds the upper hand not only because the country has the second largest gas reserves in Latin America and is supported by Venezuela, the largest gas producer in the region, but also because Brazil receives its main natural gas supply from Bolivia, a supplier difficult to replace.

Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.