Petrobras May Invest $5 Billion in Bolivia

SAO PAULO, Brazil – Petrobras, Brazil’s state-owned oil company, and unnamed partners could invest US$5 billion in Bolivia in coming years to extract natural gas from the second-largest reserves in South America, the company said Monday.

The company confirmed the amount after Bolivia’s La Razon newspaper quoted Petrobras international director Nestor Cervero saying that the company was negotiating an investment program of more than US$5 billion with Bolivia’s state energy oil company, Yacimientos Petroliferos Fiscales Bolivianos, or YPFB.

But Petrobras said Monday that no deal has yet been reached with YPFB or the administration of Bolivian President Evo Morales, inaugurated last month as Bolivia’s first leftist Indian president.

Petrobras announced Friday that it will sign an agreement at the end of this month for projects to guarantee long-term natural gas supplies to Brazil, Bolivia’s biggest natural gas client.

Analysts believe Morales will try to model Bolivia’s energy industry after Venezuela’s, where most multinational oil firms are managing to live under a system dominated by President Hugo Chavez’ socialist government.

Morales wants to turn YPFB into a company like Petrobras, though the Bolivian state company needs an infusion of hundreds of millions of dollars to transform it from its current state – little more than a collection of bureaucrats and decrepit gas stations.

Bolivia’s new president has also vowed to nationalize Bolivia’s gas industry, dominated by multinational companies that have developed Bolivia’s gas since a mid-1990s privatization wave.

But Morales and members of his administration have indicated they welcome the presence of state-owned companies like Petrobras and Venezuela’s Petroleos de Venezuela SA, which recently opened an office in the Bolivian capital of La Paz. Venezuela has the continent’s largest natural gas reserves, and is the world’s fifth biggest oil exporter.

Big holders of Bolivian reserves include Britain’s BG Group PLC and BP PLC; France’s Total SA; the Spanish-Argentine Repsol YPF SAl; and U.S.-based Exxon Mobil Corp.