Saturday, May 06, 2006

Oil Wells That End Well ....?

BBC News report that Spain has accepted Bolivia's nationalization plans as their delegation reached an agreement with Evo's administration (there is now word on what Repsol will do next, however). On the South American front, Brazil and Argentina have also accepted Bolivia's actions (here). So, Evo seems to have gotten away with it. But did he really?

Bolivia is no energy giant, like Venezuela. Therefore, taking a step like that on May Day is a huge gamble -so much's obvious. Evo has said that the increase in government earnings will compensate for the lack of investment from oil companies. The question then becomes whether this is enough.

Some companies have already said that they would rather invest in Al-Qaeda torn Pakistan than in Bolivia (here). Others may not say anything or grab headlines, but will surely follow the same reasoning. And this where Bolivia's losses begin. So, government earning will compensate for the lack of investment of oil companies, but what happens to all other investment now looking the other way? Sadly, this may be one of the least important considerations for the government: if we talk on political terms, Evo has already won his reward -in the form of the forthcoming Constituent Assembly (here).

It is really a confortable position just bash and trash Goni's privatization and contracts and say that this 'reform' was long overdue. It is really easy saying that the prices we negotiated were too low and that Evo corrected a wrong. It is not difficult falling prey to conspiracy theories where the multinational corporations and the rich are always to blame. On the other hand, it is more difficult to make people understand that there are other ways of renegociating prices and contracts -ways that will not hurt Bolivia's prospects.

But, what the hell, perhaps it is only a matter of marketing a myth.


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4 Comments:

Blogger CandiaMan® said...

as far as i know full acceptance with the new terms has been misundertood.

Repsol and Petrobras had expresed and recogniced sovereignity within Nationalization, but their business in Bolivia will be treated in negotiations. if it doesn´t work out there, it´s possible to seek international help.

Petrobras hasn´t initiated negotiations yet, same goes for repsol who is going to start next week when evo reaches europe.

by the way, they are using chavez's airplane again.

4:59 PM  
Blogger Briegel Busch said...

I share some of your concerns about democracy in Bolivia, but I am specially wondering how Brazil will react to all this when it comes to settle a new gas price, and how it will affect the economy in Bolivia in the long term.

Other thoughts in my blog:

http://bolivia-eclipse.blogspot.com/

3:50 PM  
Blogger Boli-Nica said...

One thing that is really annoying is how PDVSA is sending auditors to audit the companies in Bolivia.

http://bolicarreras.blogspot.com/2006/05/bolivia-venezuelan-auditors-huh-fuera.html

7:53 PM  
Blogger Alvaro Ruiz-Navajas said...

Hi there. thanks for your comments. I really enjoyed the links you put in here and have already added them to my blogroll.

10:33 AM  

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