On May 1st Bolivian President Evo Morales nationalized Bolivia’s natural gas reserves. The extent to which this nationalization will take place is still unknown. He ordered the military to occupy gas fields in 56 locations around the country, threatening to kick out foreign companies that did not acknowledge state control.
Morales demanded that the companies renegotiate their contracts with government within six months.
"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of its natural resources," Morales said in a speech from the San Alberto petroleum field, wearing a white helmet from the Bolivia’s state-owned gas company, YPFB. Nearby a banner hung that said, "Nationalized: Property of the Bolivian people."
The day the announcement was made thousands converged to celebrate the nationalization in La Paz’s central Plaza Murillo.
Government engineers were prepared to take over day-to-day administration and to maintain production levels should any of the companies defy the decree, Bolivian economist Gonzalo Chavez told the The San Francisco Chronicle
The move has made investors nervous. Gas companies currently operating in Bolivia are particularly on edge. Brazil’s Petrobras gas company is one of the largest investors in Bolivian gas, their investments are worth billions of dollars. "These conditions make gas operations practically impossible in Bolivia," Petrobras President Jose Sergio Gabrielli told Brazil’s Globo Television Network.
Other companies working in the country include Spanish-Argentine Repsol-YPF, France’s Total, Britain’s BG Group and BP, and the U.S.-based Exxon Mobil Corp.
Though the details of the nationalization plan aren’t totally clear at this point, it looks as though foreign-owned gas and oil companies will be allowed to only operate the fields, whereas the oil and gas production itself goes to the state-owned YPFB.
The government’s plan involves a mandatory sale of most assets in the industry to the government. Morales said he will not expropriate, and will allow some companies to stay involved as minority shareholders based on terms set by his administration, according to The LA Times.
Under this new plan the Bolivian state will bring in an additional yearly income of 300 million dollars as holder of 82 percent of shares from large fields operated by transnational companies and 60-70 percent shareholder of smaller fields, said Prensa Latina.
During a White House Press Briefing Scott McClellan said the Bush administration was "looking into" the news of gas nationalization in Bolivia. "We have not been able to determine if any official change has been made at this point, and what impact that might have."
Reports indicate that Morales has made a significant step toward realizing the demands planted in demonstrations for nationalization of gas in 2003 and 2005 which ousted two presidents, and left over 80 people dead from government police and military repression.