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Brazil and Bolivia Can’t Reach Accord One Year After Oil Nationalization

Brazilian president Lula and Bolivian counterpart Morales

Brazilian president Lula and Bolivian counterpart Morales Bolivia's president Evo Morales denied having squabbled with Brazil's Lula da Silva during the recent energy summit in Venezuela, but admitted having discrepancies over how much Bolivia must pay for the two nationalized oil refineries from Petrobras.

"I want to say that we have not had differences to the extent which from Brazil have been interpreted as a fight with my good friend Lula", said Morales in La Paz after having underlined his "respect and admiration" for the Brazilian leader.

"With companion Lula we are close friends and have many coincidences", he insisted rejecting versions in the Brazilian press that dialogue in Venezuela between the two leaders was "harsh" and that Lula rejected Bolivian conditions for the nationalization of Petrobras refineries.

Morales did admit "discrepancies" as to how much Bolivia should pay Petrobras for having taken control of the refineries, which continue to be managed by the powerful Brazilian corporation in spite of the May 2006 nationalization process.

The difference apparently rests somewhere between the commercial and inventory value of the refineries which was what Petrobras deposited back in the last decade when it took over the plants and refurbished them.

"That is in debate. Dialogue will continue with the sponsoring of the presidents of Brazil and Bolivia, between Petrobras and the Bolivian government owned oil company, YPFB", said Morales.

The two refineries one in Cochabamba and the other in Santa Cruz were purchased by Petrobras from the Bolivian government in 1999, having paid US$ 104 million.

According to the Bolivian press Morales is trying to have the two refineries back under government control by May first, on the first anniversary of the nationalization process.

At the beginning of the year Hydrocarbons minister Carlos Villegas estimated that in May the Bolivian government should have concluded negotiations to take control of five of the nationalized oil companies which remain under private management.

Besides Petrobras refineries, the group includes Andina (Repsol-YPF affiliate); Transredes (Shell & Ashmore); Chaco (British Petroleum); and the Hydrocarbons Logistics Company that includes Peruvian and German investors.

In related news the Bolivian government announced that natural gas exports to Argentina are "absolutely normal" in spite of the ransacking of a border station belonging to the gas pipeline connecting both countries, which happened during a regional dispute.

"The flow of five million cubic meters per day to Argentina and lesser volumes to the domestic market from the province of Gran Chaco has not been interrupted", asserted Galia Morales from Bolivia's oil regulating body.

"Pumping is on automatic pilot" was confirmed by the companies involved.

Different counties from Gran Chaco province are disputing the possession of a gigantic natural gas deposit in the area.



  • Show Comments (5)

  • AES

    Ch.c: Hey Clueless
    Last Friday, after just 14 months in office, President Evo Morales named his fourth president of Boliviaˢ۪s state oil and gas company (YPFB) in just over 14 months in office, Guillermo Aruquipa Copa. Boliviaˢ۪s oil and gas team has been a story of one turnover after another, including three heads of its regulatory agency and two energy ministers. The current minister, Carlos Villegas, submitted his resignation last month, but was talked into staying by President Morales.

    Morales OliveraÀ¢€™s credentials had been questioned from the start. He had no previous experience in the oil and gas business before President Morales named him an advisor to YPFBÀ¢€™s president in January of last year. He did, however, come with significant party references – his father is a leading member of the MAS party, and his sister the director of BoliviaÀ¢€™s customs service. Last October opposition lawmakers accused him of favoring his father in the awarding of auditing contracts for gas fields. Then in January, over objections by critics that he was unqualified, President Morales tapped Morales Olivera to be YPFBÀ¢€™s president despite a YPFB statute that stipulates that the company’s president should be a professional in the field, and have at least five yearsÀ¢€™ leadership experience in the energy .

    This and other recent setbacks have left Bolivians questioning their governmentˢ۪s capacity to manage its all-important oil and gas industry.

    Perhaps the final blow for Morales Olivera was the appearance in national media of a series of photographs taken last December showing him and his negotiating team of young professionals, who call themselves the À¢€˜rug rats,À¢€™ enjoying the beaches and nightlife of Havana, Cuba. They had just completed a training seminar at a cost to Bolivian taxpayers of over $40,000. Vice President Garcia Linera has asked YPFB to justify these expenses

  • AES

    Of course they cant agree, Boliva already is in possession of the property it stole, reniging on a deal, its word is not its bond. They are theives, cheap business men without honor. A thief believes that once they have stolen the property it is you that owes them if you want it back. ‘You dont expect a thief to keep their word, business is often about averaging, and ‘nothing ever goes right in business’.

  • mafagafo

    Bolivia, again, the self-made loser

  • ch.c.

    Its words and not its bonds ????
    I supppose you are talking about Lula…also !
    – Did he not promise 10 millions new jobs during his first mandate ? He delivered only 5 millions.
    – Did he not promise 400’000 MST settlements ? He delivered half….only !
    – Did he not promise a fight against corruption ? There is MORE corruption now !
    – During the vote buying scandal, did he not say “Impunity will not be tolerated” ?
    90 % of those found guilty by the investigators and by the Ethics committee of the Congress, have been pardoned, in a secret vote,
    by the other politicians, as corrupted as the ones they pardoned !
    – Did he not promise 5 % economic growth rate year after year ? He came close only in 2004, one year out of 5 !
    – Did he not promise more security and less violence ? Security is declining and violence/crimes growing.

    I could continue…for hours about Lula words and bonds !!!!
    Lula words and promises are worth ONE 1940 Brazilian currency unit.
    Or less than today 0,00000000001 Reais !

    And why are you against Bolivia energy nationalization and NOT against Chavez Energy and even some medias nationalizations ????

    Ohhh…and guess who was publicly in favor of Morales…before his election ! Lulaaaaaa…….of course !
    At least and contrary to Lula, Morales sticks to his words. Before his election, he said that the Energy Industry will be nationalized.

    Thus who is surprised ?
    Surprised that for once, a LATAM President deliver what he promised ?

    Morales certainly deserves more respect than Lula….by sticking to his words AND promises !

  • conceicao

    This is just further proof that Chavez, Morales et al cannot manage and/or upgrade the industrial assets that they have co-opted. There is a bright dividing line between the competency and
    efficiency of the Brasilian multinationals as compared to the empty ideology of the new wave South american socialists. I believe that the clownish example Morales, etc, provide will keep
    Brasilian industry on the other side of the line no matter who controls the Brasilian government.

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