May 2, 2006

Bolivia Nationalizes Gas and Oil Fields

Left: Bolivian President Evo Morales, courtesy of BBC News

(La Paz, Bolivia) Bolivia's President Evo Morales announced that he is placing his country's energy industries under state control.

Morales said on Monday he ordered the military to occupy Bolivia's natural gas fields, while threatening to expel foreign firms that do not recognize state authority.

The decision is the start of a process to nationalize all of Bolivia's natural resources. Morales said that the next industries will be the mining and forestry sectors.

"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," said Morales. "The looting by the foreign companies has ended."

Brazil and Aregntina are Bolivia's largest natural gas customers. Analysts are divided on the effects that the move will have on world energy prices.

Bolivia has the second-highest natural gas reserves in Latin America, behind Venezuela. The landlocked nation has an estimated 54 trillion cubic feet of natural gas reserves, but is not a major exporter of crude oil.


M A F said...

Hey Mike, it looks like Hugo Chavez has yet another ally in Latin America. Perhaps Mexico could learn a thing of two from their neighbors to the south.

Petrograde said...

Like looking out for themselves and not being slaves to the US?

Anonymous said...

Evo Morales has added a new chapter to the Bolivian "gas war" by annoucing the official nationalisation of all gas fields in Bolivia. All forgein companies currently involved in the Bolivian gas industry are required to agree new contracts with the state-run firm, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 180 days. As part of the nationalisation program, Bolivia will keep up to 82% of their revenues, allowing them just the remaining 18%.

Evo Morales decision to nationalise the Bolivian gas industry was expected. However it is concerning Evo Morales decision will not only impact the United States and Europe but the countries part of the "South American nation" Evo Morales pledged to support as part of his signing of the The Bolivarian Alternative for the Americas. Read more about "The Bolivarian Alternative for the Americas" at Dark Matter Politics.

Petrobras, Brazil's leading oil company has invested more than $1bn in Bolivia and controls 45% of its gas production. This decision will mark a clear break between Mr Morales and Lula - jeopardizing the relationship between Bolivia and Brazil. This is a massive blow to Brazil's president who is facing re-election the 1st of October, 2006.

Now that Evo Morales has control over the gas fields he will require control over the distribution of these resources. This will lead to increased pressure by his administration on the Chilean government and international community (mainly the Organization of American States) to review Bolivia's access to the sea. Bolivia and Chile broke off full diplomatic ties in 1978 over the outcome of a land and sea war at the end of 1879, when Chile won mineral-rich coastal territory from Bolivia. Bolivia wants to negotiate sea access through northern Chile so that its natural resources and agricultural products can be sold to the booming markets of the Asia-Pacific region. But Chile has opposed ceding territory to Bolivia.

The political and economic animosity of Bolivians toward Chile should not be underestimated - it will impact any negotiations between both nations. Bolivia's only other alternative is to build a pipeline through Peru, however a basic knowledge of the regions geography indicates this would be an expensive undertaking. It is unlikely Chile will comprise its sovereignty over a "Sea for Gas" agreement proposed by many Bolivians (69% of Chilean respondents believe a solution should be taken without ceding territory). Furthermore, it is unlikely Evo Morales will cease in his pledge to return the sea to his Bolivian citizens.

Without a doubt Bolivia's "gas war" has now become a regional issue which could destabilise the South American region. Furthermore, Evo Morales future approach towards his regional counterparts including Brazil and Chile will determine the true extent of his ideals and drive for South American integration.

Mexico might get their own Evo Morales on July 2, 2006 if the opposition candidate (Mexico City Mayor) Andres Manuel López Obrador wins the election.

More on this story at

Dariush said...

Prediction: A "pro-democracy" Bolivian defector will spill the beans to Uncle Sam about how Morales is "stockpiling WMD" and how he keeps an extremely rare and valuable autographed copy of Mein Kampf in his desk drawer.

Hooda Thunkit said...

Always a risk when doing business in (formerly) bananna republics...

-Sepp said...

Strange that none of you mention Morales is also the leader of the cocoa growing cartel who's main axe to grind with the US is our drug policy and eradication of bolivian cocaine. Petrograde, these people are far from being slaves to anyone (besides their own government) The companies that are operating the oil and gas fields were invited there since Bolivia is sitting a a pile of resources and had no means to utilize them. Those companies employ Bolivians.

Brian said...


You'll have to excuse Petrograde. He's a member of the "Hate America First" crowd. You can't reach him. America can never do anything right and the "revolutionaries" of the banana republics are always "fighting for the people."

He probably thinks Che Guerva is a hero.