Tuesday, May 02, 2006

Bolivian gas of discord

Yesterday, Bolivian president Evo Morales surprisingly signed a decree with which all of the hydrocarbon reserves (this means, all the petroleum and natural gas) and the respective processing plants are now fully owned and controlled by the government of such country. According to the new decree, all the international companies that used to extract and commercialize these products must give to the Bolivian government the totality of their extractions made in Bolivian territory; otherwise, they'll be forced to leave the country within the next six months.
Which will be the consequences of this measure? Companies like Total Elf (France-Belgium), British Petroleum (UK), British Gas (UK), Repsol (Spain), Petrobras (Brazil) and several others of US origin, are subject to the new rule. This announcement was surprising, and this has caused the inconformity of the countries that obtained benefits from Bolivian resources.
But these are only very short-term consequences. This may lead to many other mid-term and long term situations, such as the massive withdrawal of investments in Bolivia, the search for new competitive markets that allow the normal operation of extraction companies, and even the imitation of these measures by other emerging-economy countries.
Will Bolivians be benefited by the new hydrocarbon politics? The Bolivian government will be the most benefited with the application of this decree, because Bolivia is one of the main suppliers of natural gas for the region and they'll obtain a higher profit from the commercialization of the Bolivian resources. The question that will remain in the air will be if the rest of the Bolivian population will be benefited for that, and I'd dare to say that they won't. As the hydrocarbons conform now a monopoly in Bolivian territory, it's probable that they can expect a rise in the prices to obtain gas, oil, and other derivative products.
What other surprises will we get from Morales' government? Let's wait and see.


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