MercoPress. South Atlantic News Agency

Bolivia's Morales Nationalizes British Petroleum Unit

Bolivian President Morales announcing the nationalization

Bolivian President Evo Morales on Friday nationalized BP subsidiary Chaco after no deal was reached in talks aimed at securing a majority stake for the state energy company.

Standing alongside top military and police brass, several of his ministers and union and indigenous leaders, Morales signed the nationalization decree at the Carrasco gas field, located in the central province of Cochabamba. The decree states that state-owned energy firm YPFB will take over control of all the shares the British company controlled through Pan American Energy, which is headquartered in Argentina. Prior to the nationalization, Pan American Energy - in which BP has a 60 percent stake - owned 51 percent in Chaco and YPFB held a 49 percent stake. Chaco, which operates close to a dozen gas fields in Bolivia, recently announced that it would invest $64 million to increase gas production in the country. "We greatly regret that some energy companies do not respect Bolivian laws," Morales said in reference to the lack of agreement with Pan American Energy on a transfer of a majority stake in Chaco to YPFB. Morales said those energy companies that respect his government's decisions will be "welcome and their investment guaranteed," but that the government will intervene in those that do not. It was more than two years ago that Morales, a socialist and the first indigenous president of this Indian-majority country, made good on a promise to assert greater state control over the country's vast reserves of natural gas. The new arrangements involved a sharp increase in the taxes and royalties La Paz levies on large foreign energy firms and a return of state control over smaller operations formerly owned by YPFB. Following Friday's takeover, the Bolivian government now controls the five energy companies that had emerged from a privatization process in the 1990s: the PBR refinery purchased from Brazil's Petrobras; Repsol YPF subsidiary Andina; the Transredes pipeline company; the CLHB logistics and storage company; and Chaco. The Bolivian president's decision came just 48 hours before a referendum on a new constitution he said will "refound" Bolivia to the advantage of the Andean nation's downtrodden Indian majority. (Latin American Herald Tribune)