Bolivia, Firms Reach Deal Nationalizing Oil and Gas

LA PAZ, Bolivia, Oct. 29 -- President Evo Morales trumpeted the completion of his 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 deals, just after a midnight deadline Sunday, allowing them to operate under the control of the Bolivian government.

Morales announced May 1 that he would nationalize Bolivia's hydrocarbon reserves and gave the firms six months to cede control of their operations or leave the country.

On Sunday, after months of sometimes heated talks ended with a signing ceremony in the capital, 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 revenue from the country's two largest gas fields, said Juan Carlos Ortiz, president of Bolivian state energy company Yacimientos Petroliferos Fiscales Bolivianos.

But he said the two parties have yet to agree on control of two Petrobras-operated refineries that produce about 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.

"Bolivia is not producing enough gas to honor its existing commitments to Brazil, Argentina and the local markets," said petroleum analyst Andres Stepkowski said. "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."

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

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