< HOME  Thursday, May 04, 2006

Bolivia and ‘Big Oil’ Face Off

The situation is extremely volatile in Bolivia.
Andrés Soliz Rada, the energy minister, reiterated Wednesday that multinational companies had six months to negotiate new contracts, many of which would be likely to vastly increase the state's take.

"If the negotiations do not go well, we could go to the next step, expropriation," he said, adding that the companies would be compensated. But the first step, he said, was an audit of foreign company documents: "It's time to open the black boxes of the petroleum companies."
Speaking of black boxes, we have some that need examining, too.
Soliz Rada spoke at a news conference at a refinery run by Petrobras of Brazil, the company with the most to lose in Bolivia. Here, as at other private oil installations, military police guarded the entrances, searching cars to make sure no documents were being removed.

Bolivian officials said the briefing was intended to reassure foreign multinationals here, but it seemed to have the opposite effect, and the message was unmistakable: The government is now in charge, and the companies can take it or leave it.
Big Oil is cornered and they're threatening to make life a financial hell for the small landlocked nation of 9 million if Morales doesn't back off his demand for a greater share of profits.
The Bolivian authorities seemed to underestimate the impact of the steps that Morales announced Monday, both on their own government and on foreign companies, particularly for an impoverished country of just nine million people that is still far from being the energy giant it wishes to be.

Bolivia may have Latin America's second-largest natural gas reserves after Venezuela, but much of its wealth is far from being developed. The landlocked country also has limited sales outlets.

It stands in great contrast to Venezuela, a major oil producer that has squeezed oil companies at will with little risk that they would leave because of the huge profits to be made there.

"It's one thing to produce petroleum at $72 a barrel and have access to many markets, and it's another thing to produce gas that has only one market in the region, Brazil," said Carlos Alberto López, a consultant for foreign oil companies.

* * *

In an interview, [the president of the Bolivian company] admitted that Yacimientos had no money. Asked how it would develop the country's gas fields if foreign investment evaporated, Alvarado said he was sure foreign companies remained eager to continue in Bolivia.

"I want to be sincere," he said. "YPFB, because of the neoliberal model, has been reduced to a minimum. It has no economic resources. But we see that there is much interest by foreign companies that want to invest in the country."
You don't know them very well, do you. They'll sooner rip your heads off and suck the blood out before they share their profits with you.

They don't care if you're sincere. Look what the US is doing to Iraqis for their oil!

You think they're doing it for us?! Hell no! Our government works for BIG OIL!
Foreign companies [expressed] increasing indignation over the measures.

Prime Minister José Luis Rodríguez Zapatero of Spain said the move could affect the amount of assistance Madrid provided to Bolivia [and] he is sending a delegation to La Paz to meet with Bolivian officials.

Other companies were considering international arbitration or a court fight.

Petrobras, in a letter from its director in Bolivia to Alvarado, said that while the company would continue operating in Bolivia, it was worried and he hinted that the company could take legal action to protect its investments.

Under the decree, the state would be entitled to 82 percent of production in the biggest fields, up from the share of less than 18 percent that the companies first agreed to when they began developing the fields.

Yacimientos also would take a majority stake in three companies - Chaco, Andina and Transredes - that once were state-owned but are now run by foreign companies.

Petrobras also appears to be losing control of two refineries, including the one where the briefing was held Wednesday.
Bolivians need to come up with a financial plan that DOES NOT include Big Oil.

Thank your lucky stars, pay them for their losses, and consider the relationship over. You are FAR better off without them. Don't make the mistake of letting them back on your land.


At Thursday, May 04, 2006, Blogger qrswave said...

Good news:

"The leaders of Brazil, Bolivia, Venezuela and Argentina reached the agreement at an emergency summit in Argentine tourist town of Puerto Iguazu on Thursday to manage the fallout of Bolivia's nationalisation of its natural gas industry.

The leaders stressed the idea of regional unity despite the crisis and dismissed the notion of a rift between Bolivia and Venezuela on one side and Brazil and Argentina - Bolivia's top gas markets - on the other.

Luiz Inacio Lula da Silva, the Brazilian president, said at the meeting's closing news conference that he saw no alliance between Bolivia and Venezuela.

After three hours of talks, they came up with a document spelling out the way forward.

Nestor Kirchner, the president of Argentina, said: "In terms of price, the document is absolutely clear. It says ... that bilateral meetings will be the means to resolve price discussion between countries."

The document also said it was important to keep gas supplies on line. "

At Friday, May 05, 2006, Blogger jomama said...

Since when has gummint produced anything but conflict? Well, all of 'em produce a lotta gas, but not the kind worth anything.

I heard recently that Venezuela is going to Russia for some oil supplies.

Know anything about that?

At Friday, May 05, 2006, Anonymous nikto said...

Great Blog!

I just came here for the 1st time and I am favorably impressed.
Good job to the Blogger!

I am curious as to just how much the Iran oil bourse has caused the recent upswing in oil prices.

Is there any way to get a handle on that?

The MSM sure ain't reporting on it.

I like this Blog, and I'll be back.

At Friday, May 05, 2006, Blogger qrswave said...

jomamma, to your remark about government, Andrew Jackson says it best:

"There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing."

don't know anything about Venezuela and Russia.

nikto, thanks!

It's not the bourse that's driving the price of oil up. It's paranoid schizophrenic traders and the greedy bankers behind them.


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