Two energy companies sign new deals in Bolivia
On the eve of a deadline for international companies to negotiate new deals, several top investors were still in talks, including Brazil's state-owned energy company, Petrobras, Spain's Repsol YPF and British gas and oil producer BG Group Plc.
As part of the nationalization decreed by President Evo Morales in May, foreign companies were given six months to negotiate new contracts to hand over a majority stake in their Bolivian operations or abandon the country.
"I want to tell other companies we are negotiating with that although we are a small, developing country, companies have to respect our rules, our laws," Morales said during the signing ceremony in La Paz.
The new contracts imply that French energy major Total will invest some $1.9 billion in the country, while Vintage will invest $220 million, Bolivian Energy Minister Carlos Villegas said.
The government has been in tough talks for months before a Saturday night deadline for foreign energy investors to sign new contracts giving the Bolivian state more control over production and a larger share of profits.
Villegas said Total had pledged to invest $728 million in the exploitation of the Itau gas field in the Chaco region in southeastern Bolivia with proven natural gas reserves of more than 2 trillion cubic feet.
The contract also calls for the French firm to invest $1.15 billion in exploration and exploitation of natural gas fields of Incahuasi and Aquio, also in Chaco.
In September, state-owned energy company YPFB said the country needed investments worth $800 million to meet new energy deals like one signed last week to nearly quadruple natural gas exports to Argentina in coming years.
Villegas said the Bolivian state would keep 82 percent of the revenues generated in the three fields, with YPFB receiving about $2.4 billion over a 30-year exploration contract.
"If an agreement is not reached, it is not clear what would happen, although the government has talked tough about being willing to take over the fields and perhaps enlist other foreign companies to operate," Frank McGann, an analyst with Merrill Lynch, wrote in a report.
A key campaign pledge by Morales, the drive to assert greater state control over Bolivia's plentiful energy resources has encountered setbacks in recent months. Andres Soliz Rada, the former energy minister and the ideological architect of the nationalization process, resigned in mid-September after a bitter dispute with Petrobras, the largest investor in Bolivia's energy industry.
The Bolivian government has said the negotiations with Petrobras are by far the most difficult.
"The important thing is for the terms to be adequate, so the operations are viable and there is no confiscation," Brazilian Foreign Minister Celso Amorim told Globo TV in Brazil.
Bolivia, the poorest country in South America, has the region's second-largest gas reserves after Venezuela.