Bolivia nationalizes natural gas industry

LA PAZ – President Evo Morales issued a decree formalizing Bolivia’s takeover of the natural gas industry, which he proclaimed as the final step in his country’s “fight to reclaim its natural resources” from foreign investors.

“It is a historic event,” Morales declared Sunday as he signed into law a deal concluded at the end of October with several transnational companies.

The move puts the finishing touch on Morales’ vow when he took office a little less than a year ago to nationalize Bolivia’s energy sector.

The deal gives Bolivia a majority share of the revenues generated by foreign companies in the energy sector.

Morales, who assumed office in December 2005, in May had set a six-month deadline for an ambitious nationalization of oil and gas resources to recoup energy revenues.

Bolivia’s first indigenous president, Morales moved swiftly after taking office in January to make good on campaign promises to improve social justice in a society long dominated by the legacy of European colonialism.

The arrangement agreed upon will allow foreign investors to continue to operate in his country, Morales said — but on Bolivia’s terms.

“If May 1 was the day of nationalization, October 28 was when the real nationalization occurred, because that’s when the (foreign) companies accepted all of Bolivia’s rules.”

He hailed the agreement, which was ratified by Bolivia’s legislature, as having the backing of Congress and the full authority of the Constitution.

Still, he said on Sunday, foreign investment in Bolivia is not only welcome, but eagerly sought.

“Bolivia needs a lot of investment,” he said.

Under the terms of the deal signed with Bolivia’s government on October 28, foreign energy groups have committed to a 3.5 billion dollar investment in Bolivia’s energy sector between 2007 and 2010, officials said.

The country holds the second-largest South American natural gas reserves after Venezuela, and over 26 foreign groups — including ExxonMobil, BG Group, Total, Repsol and Petrobras — have interests in the country.

State-run Yacimientos Petroliferos Fiscales Bolivianos (YPFB) now becomes a majority shareholder in the subsidiaries of foreign companies in Bolivia.

Under the new deal, 82 percent of profits will go to the Bolivian state and 18 percent to corporations.

Bolivia is South America’s poorest nation but has the continent’s second-largest natural gas reserves, after Venezuela. Bolivia does not export oil.