Morales, Zapatero Discuss Hydrocarbons Nationalization
Bolivia's President-elect Evo Morales met with Spain's prime minister José Luis Rodríguez Zapatero on Wednesday to discuss among other things the former's plans for Bolivia's hydrocarbons sector and the operations of foreign oil companies including Spanish firm Repsol YPF.
Bolivia has the second largest natural gas reserves in Latin America and Morales has caused concern in the international energy community by declaring he plans to nationalize the country's hydrocarbons reserves.
Details of his plans for the renegotiation of existing hydrocarbons exploration and production contracts remain sketchy, but Morales told reporters last week that Bolivia needs "partners, foreign investors, but not owners of our natural resources."
Zapatero and Morales planned to focus their meeting on Repsol YPF (NYSE: REP), which is among several foreign oil companies with large investments in Bolivia.
Repsol YPF began exporting Bolivian gas to Argentina last year and analysts say Repsol YPF's concessions represent a third of Bolivia's total oil and gas reserves.
Following his election last month, Morales assured foreign oil companies he would respect their Bolivian assets, but also has said the country's vast natural gas reserves have been "looted" and that current gas production contracts must be renegotiated.
Morales made it clear on Thursday that his charge that some foreign oil companies in Bolivia have smuggled fuel out of the country to avoid paying taxes does not include Repsol YPF, Reuters reported.
"Repsol YPF is not implicated amongst the smuggling companies," said Morales. "We will come down hard on companies who do not pay tax and who don't honor their contracts," he told reporters.
The new hydrocarbons law passed in May last year adds a 32% tax on top of an 18% royalty level for all hydrocarbons production in the country, bringing the combined state take up to over 50%.
Companies with contracts in Bolivia have understandably resisted the terms of the new law and many, including Repsol YPF and Brazil's Petrobras (NYSE: PBR), have frozen investments in new projects until the political situation becomes clearer.
An independent Bolivian oil analyst, who declined to be named, told BNamericas that the new government would assume control of all gas exports, negotiating prices directly with foreign governments rather than allowing foreign companies to negotiate prices with their subsidiaries in neighboring countries.
"That's what [Morales] calls nationalization, that he will take care of marketing the reserves, companies cannot do whatever they want anymore," the analyst said, adding state oil firm YPFB will act as an aggregator on all export contracts.
Fresh from meetings with Cuba's Fidel Castro and Venezuela's Hugo Chávez, Morales arrived at Madrid's international Barajas airport on Wednesday aboard a Venezuelan jet provided by Chávez, said Alvaro del Pozo, charge d'affaires of the Bolivian Embassy in Madrid.
The visit is the first of a three-country European tour, with the nationalization of Bolivia's oil and natural gas high on the agenda. Morales next stops in Europe will be France and Belgium.
At the weekend he will travel to South Africa, China and Brazil as part of a world tour in efforts to drum up support for his incoming government - the first headed by an Indian in Bolivia's 180-year history - and also to show he can hold his own on the world stage, newswire Dow Jones reported.
Morales won the presidency with nearly 54% of the December 18 vote, which is the most support for any president since democracy was restored to Bolivia two decades ago. Morales will take office on January 22.
Morales' election, however, has drawn close attention from the US for his past opposition to coca eradication efforts and his close ties to Latin American leftist leaders Chávez and Castro.
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