New president of Bolivia's state energy company envisions continental partnership

LA PAZ, Bolivia (AP) - The new president of Bolivia's state energy company said Saturday he wants to help create a continentwide energy alliance that would compete with powerful multinationals and eventually control the price and production of oil and gas in Latin America. 

The alliance would include energy-producing countries in Latin America, including Central America and the Caribbean, and would include the state energy giants Petroleo Brasileiro SA, or Petrobras, and Venezuela's Petroleos de Venezuela SA, or PDVSA, Jorge Alvarado, president of Yacimientos Petroleros Fiscales de Bolivia or YPFB, told The Associated Press. 

"We're talking at the most five years to have a company of this kind,'' Alvarado said. "It's going to guarantee energy security for the region. Far from giving energy security to other continents with Latin American resources, it's preferable to think in the security of Latin America.'' 

Alvarado referred to the proposed company as Petroamerica, a name that Venezuelan president Hugo Chavez used in a recent pledge to provide fuel to Latin America and avoid a Washington-backed Free Trade Area of the Americas agreement. 

Alvarado, appointed by new leftist President Evo Morales, also took a harder stance when discussing Bolivia's current contracts with several foreign energy companies. 

Bolivia has the second-largest natural gas reserves in South America after Venezuela.Petroleum companies have invested US$3.5 billion (euro2.9 billion) in Bolivia since the mid-1990s. The biggest players include Brazil's Petroleo Brasileiro SA, Britain's BG Group PLC, France's Total SA and the Spanish-Argentine Repsol YPF SA. 

While the Bolivian government passed a law last year that required renegotiation of energy contracts on terms more favorable to the Bolivian state, Alvarado said that Bolivia would set the contract terms and the companies would have to decide if they were willing to meet them. 

"If (the companies) want to sign contracts and form mixed companies that participate in hydrocarbon production as our partners, they're going to have all the right conditions, but ... under the rules of the game, under our legal norms,'' he said. 

Morales' Movement Toward Socialism party has long called the shared-risk contracts the government signed with several multinational companies in the 1990s illegal because they were not approved by Congress. 

Alvarado hinted that if some of the companies currently holding contracts weren't interested in the new terms, there are others Bolivia can turn to. Brazil's Petrobras, Venezuela's PDVSA and the governments of Russia, India and China have all expressed interest in partnerships with YPFB, Alvarado said. 

Venezuelan president Hugo Chavez, a constant critic of the U.S. government and close ally of Evo Morales, opened a PDVSA office here just days after Morales' Jan. 22 inauguration. Chavez and Morales signed an accord to exchange diesel for soy and Alvarado said PDVSA will be investing US$10 million (euro8.29 million) to help YPFB take back operational control of 53 gas service stations it had rented out. 

Under the new law, contract terms for oil and gas extraction require foreign companies to pay a tax of 50 percent, up from 18 percent, on extracted hydrocarbons, and also require that YPFB has at least 50 percent ownership. 

Detailed talks with current contract holders should begin in the next few days, Alvarado said. 

At the same time as the earlier contracts were signed with the multinational companies, the Bolivian government went through a privatization wave which turned YPFB into a merely administrative body. 

Alvarado, a petroleum geologist who has worked for YPFB in the past, has said he hopes to use funds from higher energy taxes to help bring YPFB back into full operation at all levels of the gas and oil production chain, little by little over the next two years. 

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