Thu, Oct 05, 2006 - Page 7 News List

Bolivia affirms deadline for nationalization of oil

AP , LA PAZ, BOLIVIA

Bolivia's oil and gas minister cautiously affirmed a Nov. 1 deadline for full nationalization of the South American country's petroleum reserves, but stopped short of saying the timetable would not be changed at a later date.

In his nationalization decree issued May 1, Bolivian President Evo Morales gave foreign oil companies six months to negotiate new contracts ceding majority control of their Bolivian operations to the state or leave the country.

At a press conference on Tuesday, Hydrocarbons Minister Carlos Villegas said the Bolivian government is working with "the effort, the intention and the hope" that foreign energy companies would sign new contracts before the cutoff date.

However, he also tacitly acknowledged that the delicate process might require more time.

"The deadline is the end of October, and of course we reaffirm that until the end of October we are going to give it all our effort," Villegas said. "But this is a negotiation, and in a process of negotiation it's very difficult to know the results in advance."

On Monday a congressional commission recommended that the deadline be pushed back 30 to 60 days so that negotiations could continue without pressure.

The commission's president said it intended to formally present its recommendation to Morales yesterday.

The proposal came a day after presidential elections in Brazil failed to produce an outright winner, prolonging the uncertainty over contentious talks between Bolivia and Brazil's state energy giant Petroleo Brasileiro SA, or Petrobras, which purchases 70 percent of Bolivia's natural gas output.

Analysts say Bolivia depends greatly on Petrobras' capital and technical know-how to manage what amounts to South America's second-largest gas reserves after Venezuela's, and will likely let negotiations run their course without enforcing the deadline.

"The worst thing you want to do is nationalize, and then before you even finalize all of your contracts say, `OK this is it, it's over, you've got to get out of here' -- when the government knows they can't do it on their own," said Pietro Pitts, editor of Latin Petroleum magazine. "If I were Bolivia, I would wait for Petrobras."

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