Bolivia OKs nationalization contracts

By DAN KEANE

LA PAZ, Bolivia

Lawmakers gave final approval to nationalization contracts with foreign energy companies, nearly a year after President Evo Morales ordered Bolivia's oil and gas industry be brought under state control.

Contracts signed last October with Brazil's state-run Petroleo Brasileiro SA, the Spanish-Argentine company Repsol YPF, the France's Total SA, British Gas and others had been held up for months by partisan squabbles and clerical errors.

On Thursday lawmakers set aside past differences and unanimously approved each of the 44 deals, which required foreign energy companies to pay increased taxes and royalties and hand over majority control of their Bolivian operations.

"I congratulate lawmakers aligned with both the administration and the opposition on this historic session that has given great support to the process of nationalization," said Vice President Alvaro Garcia, who presided over the session.

But that process has yet to clear one final hurdle: Bolivia and Brazil are still haggling over the current value of two oil refineries that Bolivian state energy company Yacimientos Petroliferos Fiscales Bolivianos, or YPFB, sold to Petrobras in 1999 for US$100 million (euro75 million).

Bolivia has targeted the Petrobras-run refineries -- which together supply nearly all the country's fuel for domestic consumption -- but Brazil is demanding that Petrobras be fairly compensated. Petrobras has said it has invested some US$105 million (euro77.5 million) in the facilities.

On Thursday, Morales hinted that Bolivia would prefer to reimburse Petrobras for the refineries' original cost, saying talks will determine whether the country will pay market price or the refineries' "inherited Bolivian value."

Brazilian newspaper Folha de Sao Paulo reported that Morales told Silva this week that Bolivia would take control of the refineries on May 1, the anniversary of the nationalization decree, without paying full compensation. Brazilian officials said Silva warned Morales against the move.

On Wednesday Petrobras president Sergio Gabrielli said his company would "defend our point of view" on the plants' value.

Last September, Bolivian Hydrocarbons Minister Andres Soliz announced the surprise confiscation of the two refineries in Cochabamba and in Santa Cruz -- without any reimbursement. Brazil complained forcefully, and Morales fired Soliz and rescinded the move.