Bolivia Celebrates Energy Nationalization As Petrobras Talks Continue

President Evo Morales trumpeted the completion of his ambitious natural gas and oil nationalization plan on Sunday, though key issues remained to be addressed with Brazilian state energy giant Petrobras, Bolivia’s largest investor.

Petroleo Brasileiro SA, or Petrobras, was one of seven foreign companies that signed new deals, just after a midnight deadline Sunday, allowing them to continue operating under the control of the Bolivian government.

Morales, Bolivia’s first Indian president, announced on May 1 that he would nationalize Bolivia’s hydrocarbon reserves and gave the companies six months to cede majority control of their operations or leave the country.

On Sunday, after months of sometimes heated talks ended with a signing ceremony in the capital of La Paz, Morales declared “mission accomplished for the people of Bolivia.”

“Bolivia definitely gave in, and Petrobras definitely gave in,” Brazilian Mines and Energy Minister Silas Rondeau said. “I don’t know who gave more, but the two sides ended up satisfied.”

Under the deal, Petrobras will grant the Bolivian government 82 percent of revenues from the country’s two largest gas fields, said Juan Carlos Ortiz, president of Bolivian state energy company Yacimientos Petroliferos Fiscales Bolivianos, or YPFB.

But he said the two parties have yet to agree on the control of two Petrobras-operated refineries that produce some 90 percent of Bolivia’s fuel for domestic consumption.

Also still on the table is the sale of Petrobras stock to the Bolivian government, which will assume a majority share of all international companies’ Bolivian operations, Ortiz added.

Meanwhile, long-running negotiations over the price at which Bolivia sells natural gas to Brazil are set to resume next month in Rio de Janeiro.

While the new contracts let Petrobras and other foreign companies continue to operate in Bolivia, it remains to be seen whether they will encourage the investment needed to expand production. YPFB recently said it would need $800 million in new investment to meet future gas commitments to Argentina and Brazil.

“Bolivia is not producing enough gas to honor its existing commitments to Brazil, Argentina and the local markets,” said Bolivian petroleum analyst Andres Stepkowski. “They do have enough reserves already proven, so they know where to go to get that gas on stream. But that has to be done urgently.

“It should not be long before we know whether these contracts are workable or not,” he added.

Morales said the nationalization deals will bring Bolivia some $1 billion in revenues this year and could eventually quadruple that, but he did not provide details.

The eleventh-hour signings were widely hailed as a victory for the government, though opposition leaders expressed skepticism. Sen. Oscar Ortiz of the conservative Podemos party, said Congress would “have to take a look at the fine print.”

For the moment, however, Morales can bask in the triumph of having granted a wish long desired by Bolivia’s poor majority, who hope nationalization revenues will expand government health and education programs.

Now-fading graffiti on the streets of La Paz still clamors for the government to take control of the country’s natural gas. Nationalization was a principal demand of the Black October 2003 protests that toppled then-President Gonzalo Sanchez de Lozada and catalyzed the populist movement that propelled Morales to power.

“The president demonstrated that he can get it done, and that he was capable of doing what previous governments should have done,” said Nazario Ramirez, president of the powerful Federation of Neighborhood Groups in the La Paz suburb of El Alto.

Also signing nationalization deals Sunday were the Spanish-Argentine company Repsol YPF and its Bolivian subsidiary Andina, British Gas Bolivia Corporation and its subsidiary Chaco, Argentine company Pluspetrol and Matpetrol, a Bolivian company that operates internationally through its parent, Equipetrol.

The French company Total SA and the U.S.-Based Vintage Petroleum signed new Bolivia contracts on Friday.

YPFB’s Ortiz, president of Bolivian state energy company YPFB, said Sunday that stock negotiations with Andina and Chaco were still continuing.

Associated Press writers Carlos Valdez in La Paz and Harold Olmos in Rio de Janeiro, Brazil, contributed to this report.