Bolivia Moves to Nationalize Gas Industry

By ALVARO ZUAZO
The Associated Press
Tuesday, May 2, 2006; 1:49 AM

LA PAZ, Bolivia -- President Evo Morales issued a decree nationalizing Bolivia's vast natural gas industry Monday, sending soldiers to occupy gas fields and threatening to evict foreign companies unless they give the Andean nation control over the entire chain of production.

The move fulfills an election promise by the leftist president, who has forged close ties with Cuba's Fidel Castro and Venezuela' Hugo Chavez, to increase state control over Bolivia's natural resources, which he says have been "looted" by foreign companies.

Morales sent soldiers and engineers with Bolivia's state-owned oil company to installations and fields tapped by foreign companies _ including Britain's BG Group PLC and BP PLC, Brazil's Petroleo Brasileiro SA, Spanish-Argentine Repsol YPF SA, France's Total SA and Texas-based Exxon Mobil Corp. The companies have six months to agree to new contracts or leave Bolivia, he said.

"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," Morales, Bolivia's first Indian president, said in a speech from the San Alberto field operated by Petrobras in association with Repsol and Total SA.

State television aired footage of soldiers and police standing guard outside some gas installations and petroleum company offices in the eastern city of Santa Cruz, where much of the industry is based.

Vice President Alvaro Garcia Linera said troops were sent to 56 locations nationwide.

"The looting by the foreign companies has ended," Morales declared.

The announcement follows a trend by oil- and gas-rich Latin American nations to exact a larger share of profits from extraction of the fossil fuels.

The move comes as Ecuador argues with Washington over a new oil royalties law and less than a month after Chavez ordered the seizure of oil fields from Total and Italy's Eni SpA when the companies failed to comply with a government demand that operations be turned over to Venezuela's state oil company, Petroleos de Venezuela SA.

Brazil is Bolivia's biggest natural gas client, followed by Argentina, and Brazil's demand has been rising rapidly due to power generation, cooking and automotive needs.

Landlocked Bolivia must sell to its neighbors because it lacks a pipeline to ship gas to the Pacific Ocean and from there to Asia, Mexico or the United States.

Any price jolts would mostly be felt in Argentina and Brazil, but Bolivia already has been seeking to boost prices for customers in both countries.


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