Bolivian President Grabs for Natural Gas Industry

By Tyler Bridges, The Miami Herald

May 01–LIMA, Peru — With the stroke of a pen, Bolivian President Evo Morales decreed Monday that foreign companies must yield to the government their majority stake in the country’s crucial natural gas industry.

The move is likely to displease Brazil, France, Spain and Great Britain, all of which are home to major energy companies hit by Morales’ move, while winning favor in Cuba and Venezuela — Washington’s two least favorite countries in Latin America.

Morales called his move a “nationalization,” but the phrase is a misnomer since the government didn’t take total control of the foreign companies and send their executives packing, as Latin American governments have done in the past.

Still, what Morales decreed was plenty drastic: The foreign companies can continue to operate in Bolivia but will have to let the government decide who will buy their gas and at what price.

Morales also said the government will have to own at least 51 percent of every stage in the natural gas production process. He also raised taxes on operators of the two biggest fields, Brazil’s Petrobras and Spain’s Repsol.

“I think the companies will end up selling their assets,” said Juan Cariaga, a former finance minister, speaking by telephone from La Paz. “Who will stay here to have your capital run by someone else? Who will stay under those conditions?”

Analysts had long been anticipating some sort of Morales decree on the natural gas industry. He won the presidency in December on the pledge that he would “nationalize” the industry. Debates over how to best exploit Bolivia’s natural gas reserves, the second biggest in Latin America after Venezuela’s, have helped topple two presidents in the past three years.

But Monday’s decree went further than expected, perhaps for political reasons, said Roseanne Franco, an energy analyst with PFC Consulting in Washington, D.C.

“The government has been facing more protests — strikes by medical workers and others,” Franco said. “This may have been a tool to strengthen him.”

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