Foreign firms accept Bolivia's natural gas nationalization

Oct 30, 2006, 10:36 GMT

La Paz - Foreign energy companies active in Bolivia have signed contracts accepting new conditions after the nationalization of the country's natural gas resources, according to reports Sunday.

President Evo Morales, a leftwing populist, decreed the nationalization action on May 1, setting a contract renegotiation period of 180 days, which expired Saturday.

Eight foreign firms - including Brazilian state firm Petrobras, Spain's Repsol-YPF and Britain's BG - signed new contracts Saturday with Bolivian. The French company Total and US-based Vintage had reached agreements Friday.

Morales called the contracts 'historic.'

The Bolivian government's share of energy revenue was hiked from 50 per cent to 82 per cent, giving Bolivia one of the highest energy- extraction taxes, according to Energy Minister Carlos Villegas.

The renegotiation of contracts was considered by many analysts a significant success by the South American country's first president of indigenous descent.

The foreign firms all agreed to allow Bolivian state company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) to market their entire production.

With a poverty rate of 64 per cent, one of the highest rates in Latin America, Bolivia has the region's second-largest natural gas reserves after oil-rich Venezuela. Neighbouring Brazil and Argentina rely heavily on Bolivian natural gas.

Morales has pledged to devote a greater income from the country's energy resources to fight poverty.