MercoPress. South Atlantic News Agency

Bolivia guarantees gas supplies to Argentina and Brazil

The president of Bolivia's government hydrocarbons corporation YPFB, Jorge Alvarado Rivas guaranteed gas supplies to Argentina and Brazil but also called for “understanding” following the country's decision to nationalize the energy sector.

In anticipation of the regional presidential summit of Bolivia with Argentina and Brazil plus Venezuela, Mr. Alvarado Rivas interviewed by an Argentine broadcasting station asked for understanding from "president Kirchner and Lula regarding president Morales historic and patriotic decision".

Alvarado Rivas insisted that provision of natural gas to Argentina and Brazil was guaranteed.

"In no way" replied YPFB CEO when specifically asked about the possibility of gas sales reduction and underlined that "we will respect existing agreements with Argentina, Brazil and any other country" with which deals exist.

However he ratified that "gas prices both to Argentina and Brazil will be increased for which negotiations will begin in a few days".

"We know we're selling at a price extremely low compared to international values", he added.

Alvarado Rivas said Bolivia understands the "logic concerns" of Brazil and Spain, which have companies with strong investments in the Bolivian energy industry, Petrobras and Repsol-YPF.

But the Bolivian government decision "in no way should harm or imperil relations with President Lula or Spain".

YPFB CEO added that "we're not interested in expulsing international corporations working in our country. We're not confiscating anything, we want to dialogue so they can continue to work and operate in our country. We're interested in joint companies with YPFB".

Last Monday President Morales announced the nationalization of Bolivia's hydrocarbons resources and gave foreign corporations 180 days to review contracts and adapt to the new production and trading conditions.

Nevertheless according to Bolivian political analysts the reason for President Morales's dramatic nationalisation announcement is more domestic than international. With elections to a constituent assembly pending on July 2, Morales is keen to reassert his nationalist credentials. Although the ruling Movimiento al Socialismo (MAS) party is well placed to be the largest party in the new assembly, Morales is concerned to ensure that this control is overwhelming. Public opinion polls from last month indicated that his strong popularity was beginning to slip, possibly opening up opportunities for his political opponents.

As to the international corporations, even when some might decide to leave, others will probably stay since Bolivia has the second largest gas reserves in Latinamerica behind Venezuela and eventually will bring lucrative business. Bolivian officials also believe that other investors will be pleased to replace those moving out.