Bolivia's state oil firm says investors still keen http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-05-18T132009Z_01_N18358342_RTRUKOC_0_US-ENERGY-BOLIVIA.xml
Thu May 18, 2006
By Helen Popper
LA PAZ, Bolivia (Reuters) - The president of Bolivia's state oil company YPFB says a string of foreign firms want to invest in the South American country's energy sector despite the leftist government's sweeping nationalization.
Jorge Alvarado told Reuters that Venezuela's state oil company wants to invest $1.5 billion in exploration and production projects in Bolivia, which has the region's biggest natural gas reserves after oil-rich Venezuela.
But he said PDVSA was not alone. "There's a lot of interest. At the moment, there are three U.S. companies...one is the Shaw Group. The Russian company Gazprom (GAZP.MM: Quote, Profile, Research) also wants to come and explore," he said in his La Paz office late Wednesday.
He added that two Chinese firms, a Brazilian and a Bolivian energy company were also interested in investment projects.
"(These discussions) aren't going to be affected (by the nationalization) because we're not scaring away investors. Neither are we telling the companies currently here to go. What we want is a fair deal in which both sides win," he said.
Bolivian President Evo Morales has formed close ties with his ideological ally Venezuelan President Hugo Chavez since being elected in December on vows to nationalize the energy industry as a way to fight poverty in South America's poorest country.
Venezuela is the world's No. 5 oil exporter and Alvarado said Chavez would sign a string of cooperation deals between the powerful PDVSA and YPFB in Bolivia on May 26.
"PDVSA wants to make investments in exploration worth close to $800 million and afterward $700 million in production, so an investment in exploration and production of close to $1.5 billion," he said, playing down speculation over the influence of PDVSA on YPFB.
"They're not going to get a special treatment. On the contrary, we're getting a special treatment because no other company has come and said 'we're going to invest everything and you're going to have the 51 percent of shares," Alvarado said.
BRAZILIAN MARKET 'SECURE'
Brazilian state oil company Petrobras (PETR4.SA: Quote, Profile, Research) (PBR.N: Quote, Profile, Research) is the biggest investor in Bolivia's energy industry and has talked tough over the May 1 nationalization decree that cuts its share of the production value to as little as 18 percent.
Petrobras chiefs have also responded angrily to Bolivia's calls to hike the price of the gas it sells to its neighbor.
However, Petrobras has agreed to hold talks on renegotiating its operating contracts in line with the nationalization and Alvarado said he believed the Brazilian gas market was secure.
He said Brazilian exploration for alternative sources would still take many years, and even that would leave a supply deficit that Bolivian gas could fill: "For that reason it doesn't worry us that people say this market could be lost."
Alvarado, a geologist and former deputy for Morales' MAS party, was appointed to the helm of YPFB soon after the government took office, charged with putting the dilapidated energy company at the heart of the sector.
He said one of biggest goals was to increase exploration for new reserves, saying companies had under invested.
"One of the worries I've had since my first day in charge of the company is that we're not increasing our reserves. I want to attract foreign investments in exploration but as partners with YPFB."
The May 1 nationalization, which saw troops deployed outside foreign-owned gas and oil facilities, drew expressions of concerns from investors and even friendly governments, but Alvarado said its terms were only reasonable.
"Before this decree they (foreign companies) took the biggest slice of the pie and they left us the crumbs. We think it's fair and if they have a profit and we have a profit too, that's good business."
© Reuters 2006.