MercoPress. South Atlantic News Agency

Bolivia's coveted gas and oil resources

When Bolivian elected president Evo Morales takes office next Sunday the energy industry will be closely watching his first steps given the country's vast resources and the incoming leader's rhetoric.

While on the campaign trail he pledged to recover Bolivia's natural resources from foreign corporations, but once elected and visiting overseas he promised to respect investors' rights and assets but anticipated he would demand a review of all oil and gas existing contracts so the proceeds can be passed to Bolivia's poor which make up over 65% of the population, mostly indigenous.

Bolivia with proven and potential natural gas reserves of 53.3 trillion cubic feet, second in South America to Venezuela's 151 trillion cubic feet, according to the US Energy Information Administration, has become a crucial supplier for energy thirsty neighbours such as Brazil, Argentina, and even Chile if the diplomatic rift can be overcome.

Foreign companies argue they have invested 3.5 billion US dollars for Bolivian gas production and exploration since 1997, but new investments have been largely put on hold since last year due to political uncertainty and a new law raising payments the companies must give the government.

The foreign companies involved in the oil and gas industry are: British Gas Group is a partner in two large gas fields, and has eight exploration blocks that have not started production yet. Company says it is ??strategically placed'' to supply gas to the big Brazilian market.

British Petroleum explores for petroleum and produces it through partnerships. BP owns a 30% stake of Empresa Petrolera Chaco SA, whose other principal shareholder is a Bolivian pension funds. Besides owns 60% of Pan-American Energy, which controls a big block in partnership with BG and Repsol-YPF. BP also supplies aviation fuel at 15 Bolivian airports.

The US Exxon Mobil Corporation does not produce gas in Bolivia, but holds a 34% interest in a field where Total is producing. British Gas holds a 25% interest in the same bloc.

Petrobras, Brazil's state-owned oil company produces gas and transports two-thirds of Bolivia's daily gas production to Brazil. Petrobras also owns two refineries that account for 95% of the nation's refining capacity, a quarter of Bolivia's gasoline stations and a significant pipeline transportation network.

The Spanish-Argentine Repsol-YPF company started exporting Bolivian gas to Argentina last year, supplying an area in northwestern Argentina where demand is outstripping supply. Analysts say Repsol's rights to gas in Bolivia represent about a third of the company's total oil and gas reserves, but that production to profit from the holdings not expected in short-term.

The French company Total produces in five gas fields with exports to Argentina and Brazil. Announced a new find it called ??significant'' last year that was being assessed for production.