MercoPress. South Atlantic News Agency

Bolivia takes over energy industry: Brazil and Spain alert

Bolivia's Socialist president Evo Morales signed Monday a “supreme decree” giving the government “absolute control” over the country's huge hydrocarbons reserves and operations while the Army was sent to ensure control of wells and refineries.

"At this very moment in Cochabamba and Santa Cruz refineries are being occupied and controlled by the Bolivian Armed Forces and the Bolivian oil company, YPFB. Today the refineries are the property of the Bolivian people", said Bolivian vice president Alvaro Garcia Linera in La Paz during the main May Day celebrations which convened thousands of workers.

Private gasoline stations around the country were also occupied by the Army.

According to the "supreme decree" as of Monday all foreign corporations operating in Bolivia will have to deliver their production to YPFB for processing and distribution, and have 180 days to adjust contracts or leave the country.

"The pillage of our natural resources by foreign corporations is over", said President Morales after reading the decree in the southern province of Tarija at the San Alberto field the country's largest and exploited by Petrobras from Brazil.

The new legislation gives YPFB a 50% plus control over all corporations operating in Bolivia which includes Repsol-YPF (Spain); Petrobras (Brazil); British Gas and British Petroleum (UK); Total-Fina-Elf (France-Belgium); Panamerican and Exxon Mobil (US); Pluspetrol (Argentina); Canadian Energy and South Korea's Dong Won.

The Armed Forces support is "to ensure the functioning of production structures thus guaranteeing the normal provision of energy products to comply both with international commitments as well as supplying the domestic market", added the document.

The surprise announcement was made at Monday noon, at a time when, according to official schedule, Morales was supposed to head a May Day demonstration in La Paz.

He called upon Bolivians to mobilize themselves against "any sabotage attempts by (any) firms" and said that the oil firms' workers who go along with "this change" will be welcomed by the authorities.

The San Alberto and Sabalo fields, from which are extracted 70% of the natural gas exported by Bolivia, both operated by Petrobras, will now have to deliver 82% of production to YPFB.

Brazilian Mines and Energy minister Silas Rondeau speaking from Sao Paulo described the decision to put the Bolivian energy industry under state control as "a non friendly gesture".

"It can be understood as a rupture in the understandings we are currently holding with the Bolivian government", he added although he said normal natural gas supply to Brazil (Bolivia's main client) "will not be affected".

Brazil has invested billions of US dollars to develop the Bolivian gas industry since 1996 but the administration of Evo Morales is not satisfied with the long term price agreements.

From Madrid the Spanish government expressed "its deepest concern" regarding the announcement of President Morales.

"We expect that the 180 days announced by President Morales for corporations to adjust their current contracts will open a true process of negotiation and dialogue between the administration and the companies", indicated the Spanish government release.

Madrid expects that the negotiation process "will respect interests of both sides and avoids sending a negative signal to the international investment community which is closely following the events".

Spain's YPF-Repsol and Brazil's Petrobras hold control over most of Bolivia's natural gas reserves currently exploited.