Step 1 in Bolivian Takeover: Audit of Foreign Companies

Bolivia is taking steps to nationalize its natural gas industry, announcing plans to revise contracts with foreign energy firms and audit financial records. The multinationals have six months to negotiate new contracts or face takeover with compensation. Landlocked Bolivia has Latin America’s second largest gas reserves, which are largely undeveloped, with Brazil serving as the major market. Venezuela’s national oil firm, with more markets and experience in controlling foreign firms, has stepped up to provide technical assistance on the audits and construct a gas-separation plant. Bolivia is confident that Venezuela’s assistance will improve markets and profits for Bolivians. But the foreign energy firms, particularly those from Brazil, are considering international court action. Under the new plan announced this week, Bolivia would be entitled to 82 percent of production in the largest fields rather than the less than 18 percent stipulated in current contracts. The government complains about a lack of employment opportunities for Bolivians and notes that the foreign energy firms have already earned plenty on their investments. President Evo Morales Aima was elected on a socialist platform, promising to nationalize the hydrocarbon industry and alleviate poverty. – YaleGlobal