Morales: Companies Need to Respect Law, Continue Dialogue

Bolivia's President Evo Morales has called for foreign companies to respect the country's law and invited them to continue discussions over revised contracts for the oil and gas industry, he told journalists during a televised interview aired on Brazilian television on Monday night.

Morales recognized companies' ownership rights over their equipment and installations but reaffirmed his government's intention to charge higher taxes and royalties and to assume ownership of all hydrocarbons produced in the country.

Morales was interviewed by Brazilian and Bolivian journalists on April 21 at the presidential palace in La Paz, Bolivia's capital.

"Companies have to have a return on their investments and post profits," he admitted. "But many companies operating in Bolivia have already recovered all their investments and I regret that past governments have allowed them to pay so little to the Bolivian people in return for our natural resources. We have to have resources to invest in education and health."

When asked about the kind of economic model he hoped to implement, he praised the use of oil resources for investment in social programs in Venezuela and the "mixed" public-private economy in Brazil.

He said talks with Brazil's federal energy company Petrobras (NYSE: PBR) were ongoing and reaffirmed his intention to form a partnership with the Brazilian company through Bolivia's state-controlled oil firm YPFB.

However, Morales appeared unconcerned if a new agreement for natural gas exports to Brazil is not reached since there are other markets Bolivia could explore, including the domestic market, Uruguay and Paraguay, he said.

Bolivia exports some 20-25 million cubic meters a day (Mm3/d) of natural gas to Brazil through the 3,000km Brazil-Bolivia natural gas pipeline.

Talks with Brazil's government over the revision of Petrobras' gas export contracts are not moving forward despite the presence of Brazil's deputy foreign affairs minister Samuel Pinheiro in La Paz.

Morales also reaffirmed his decision to throw out of the country Brazilian metals joint venture EBX, which is building a pig iron and steel complex in Puerto Suarez near the Bolivian border.

Morales accused EBX of corruption and of breaking Bolivian law. He said the environmental license for the project should not have been given.

Investments in the complex are estimated at US$330mn to produce 800,000 tons a year of pig iron and 400,000t/y of steel, local newspaper Valor Economico reported.

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