Last year, uncertainty over tax regulations prompted investment in the country’s hydrocarbons to fall to its lowest in more than a decade.
The announcement is a boon for President Evo Morales, who took office in January on a pledge to nationalize the gas industry by securing the involvement of the state as an equal partner with international energy companies. “We are working on a programme of investments in association with YPFB, with the government, of more than $5bn over the next five or six years,” said Nestor Cervero, a director of the Brazilian company, after meetings with YPFB and government officials in La Paz. Mr Cervero said Petrobras would sign an initial deal with YPFB by the end of the month that would include partnership agreements on gas production, industrializing the sector, thermo-electric power, and biofuels.
Andres Soliz Rada, Bolivia’s hydrocarbons minister, said the agreement would contain specific pledges on a project to build a gas-chemical centre on the Bolivia-Brazil border, the participation of YPFB in two refineries operated by Petrobras, the sale of natural gas, and a new contract to operate in Bolivia. He said the government would speed-up the process of defining rules to govern the sector. “We will accelerate the structural reforms we need to start a dialogue,” he said, adding that these would demonstrate that “the state is the absolute owner of hydrocarbons.” This may alarm other energy companies operating in Bolivia, such as Repsol, Total, British Gas, and BP. All foreign investors in the gas sector, apart from Petrobras, have signalled that they could go to international arbitration over a hydrocarbons law passed last year that imposed higher taxes on existing contracts. The government’s relations with most international investors have deteriorated markedly since the Morales administration came to power. Recently, the president accused unnamed foreign companies of conspiring to destabilize his administration, a charge denied by the Chamber of Hydrocarbons, an industry body.