Brazil Might Appeal to International Courts Against Bolivia’s Gas Nationalization

A price increase in the natural gas it imports from Bolivia could be the least of Brazil’s problems as a result of Bolivian President Evo Morales’ decision to nationalize that country’s oil and gas reserves.

This according to Giuseppe Bococcoli, a researcher at the Federal University of Rio de Janeiro’s postgraduate school of engineering (Coordenação de Programas de Pós-Graduação de Engenharia da Universidade Federal do Rio de Janeiro) (Coppe-UFRJ),

The worse scenario, says Bococcoli, would be an interruption of the gas supply. The reason is simple: more that 50% of the gas Brazil consumes comes from Bolivia at the moment.

Bacoccoli goes on to say that if Brazil needs Bolivia, it is also true that Bolivia needs Brazil. "Not only to buy its gas. Brazil is one of the few countries in the world with the necessary know-how in the petroleum and gas sectors…. Bolivia will need our knowledge and our technology," he says, adding that over 40% of all the gas being produced in Bolivia was discovered by Petrobras.

In his analysis of the situation, Bococcoli points out that Morales has proposed to split the revenue from big gas fields (exactly where Petrobras operates) 82% for Bolivia, and the remaining 18% for the drilling company.

In smaller fields the split would be 60-40. "He is doing that because of the astronomical rise in petroleum prices, believing that gas should follow suit," explains the researcher.

Morales has also increased royalty payments, raising them from 30% to 50%. Besides all that, according to Bococcoli, Morales is also basically proposing to take over 51% of everything Petrobras has installed in Bolivia.

But Bolivia does not have money to pay Petrobras for its installations. And then, Bococcoli continues, Brazil is supposed to come in with money and technology. "Bolivia comes in with its flag. A flag of bad taste, in this case."

Bococcoli concludes by saying that the situation is very complex. "Brazil can appeal to international courts and maybe make some changes in its diplomatic policies."

Agência Brasil

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