Brazil's Mines and Energy Minister Silas Rondeau said his government will keep discussing the issue of pricing with Bolivia and come up with a proposal to compensate for the takeover of Petrobras' two refineries. Rio de Janeiro-based Petrobras is Bolivia's biggest foreign investor and provided almost a quarter of Bolivia's tax revenue last year.
``It's going to be difficult for the Brazilians to accept a unilateral change in prices,'' said Dino Barajas, a Los Angeles- based lawyer for Paul Hastings LLP who was voted the best energy lawyer in 2004 by California Lawyer Magazine. ``They are right in seeking some sort of compensation'' for Petrobras's refineries.
Bolivian President Evo Morales claimed victory after he negotiated new contracts with all 10 energy companies that have interests in Bolivia, including Petrobras, Spain's Repsol-YPF and France's Total SA. The extent of his victory, aimed at reducing poverty in the continent's poorest nation, will depend on his ability to sell natural gas to Brazil at a higher price.
Brazil's $790 billion economy is the largest in South America and four times bigger than Argentina's, which is the second- biggest. Bolivia supplies over half of Brazil's gas needs, and about four-fifths of all gas consumed by Sao Paulo's industrial belt.
Stripy Jumper
``We are obliged to be married to Brazil without divorce,'' Morales said in a ceremony in La Paz in the early hours of yesterday, wearing the same stripy sweater he wore when he met Spain's King Juan Carlos and China's President Hu Jintao after becoming president last year. ``Brazil is the leader in the region.''
Morales said the agreements signed with the 10 energy companies would bring in more than $4 billion a year in revenue from 2010, transforming a nation where over a third of the population lives in extreme poverty, according to the International Monetary Fund.
Bolivian government officials will meet with their Brazilian counterparts in Rio de Janeiro on Nov. 10 to discuss an increase in natural gas prices, according to Brazil's Rondeau.
International Prices
``It's very clear that the price of gas today in Sao Paulo adheres absolutely to the price in the international market,'' Rondeau said. ``If we don't reach an agreement, the issue will go to international arbitrage.''
Brazil is developing its own Plangas deposit, which will produce as much as 26 million cubic meters of natural gas a year, and building two liquefaction plants in Rio de Janeiro and Fortaleza to bring in supplies from other countries, Rondeau said.
At the same time, Morales is planning to lessen his country's dependence on Brazil by supplying natural gas to Argentina and Chile.
Bolivia will almost quadruple gas exports to Argentina over the next 20 years, after Morales signed a deal with Argentine President Nestor Kirchner on Oct. 18. Bolivia is also in talks with Chile's government to become a supplier to that country's copper district, which flanks its western border.
Total
Paris-based Total, the world's fourth-biggest energy company, will spend about $2 billion producing and exploring for gas in Bolivia, Morales said on Oct. 28. Total spokeswoman Patricia Marie declined to confirm the figures.
State-owned oil company YPF Bolivianos will become a majority owner in each of the ventures agreed to by the 10 companies that signed a deal with Bolivia over the weekend, according to ABI.
Los Angeles-based Occidental Petroleum Corp. will spend $220 million on exploring or gas in the Naranjillo and Chaco Sur, the government said.
Petrobras and Madrid-based Repsol didn't say how much they would invest in Bolivia. Repsol has invested $1.17 billion in the country over the past decade.
Since 1994 Petrobras has invested $1.5 billion in Bolivia on oil and gas exploration and production, construction and expansion of pipelines and to renovate the country's two refineries, which Petrobras operates. The refineries produce all of Bolivia's gasoline and aviation fuel and 70 percent of its diesel oil.
Morales, who campaigned for coca-leaf farmers' rights before becoming Bolivia's first indigenous leader last year, sent soldiers to take over the country's natural gas industry on May 1 and threatened to evict foreign companies if they didn't agree to hand over their assets to YPF Bolivianos within 180 days.
