Initial Exit-Polling Shows Mixed Results

(File under: Politics) As counting continues (currently about 10 percent), the yes to autonomy vote is losing by 6 percent on a national level, informs ATB noticias. Exit-poll data (boca de urna) at this time (8:31PM EST) shows the following results: 80.5 percent in Santa Cruz, 69.9 percent in Tarija, 82.1 percent in Beni and 61.1 percent in Pando voted yes to autonomy. In La Paz, Cochabamba, and Oruro 69.7, 58.6 and 74.7 percent respectively voted no for autonomy. In Chuquisaca and Potosi, 42 and 35 percent voted yes.

In regards to the Constituent Assembly representatives, MAS are said to have captured between 109 and 120 seats, followed by Podemos with 66 to 78 and UN with 9 to 12, followed by other minority parties, including MNR with 6.

Evo Morales is said to speak at 9:00PM (-4GMT) today regarding the election. You Can listen to the speech in any of the following radio stations: Illimani, ERBOL, Wayna Tambo, and Panamericana.

UPDATE: New videos! Right.- Celebrations in Tarija and Santa Cruz, Left: Autonomy Referendum / Constituent Assembly Results:

Today’s Press

(File under: Politics) As an introduction to today’s postings (three or four in total) let’s review the most interesting articles published in today’s newspapers (divided by geographical region):

West:

• Front page of La Razón: Evo Morales says he’ll respect the results.- Suspicions rose as Evo attacked once and again the legitimacy of the National Electoral Court and its directives, however yesterday night, during his last address to the press he claimed he’ll respect the outcomes, regardless of implications for his rule.
• Second story: Demographics in Play. - According to data from the CNE’s national electoral roll, 31 percent of the population entitled to vote today (about 3.7 million) or 1.2 million falls within the 18-30 year old age range. Of which 311.752 are between 18 and 21 years old. The department with the largest “young” voting population is La Paz, with 378,273, followed by Santa Cruz, Cochabamba and Potosí.
• Front page of La Prensa: MAS moves to capture two thirds of the Constituent Assembly (CA) seats. - Two thirds or 170 votes out of 255 seats are necessary to pass any regulation or modification to the constitution in the CA, MAS has seen capturing that many votes as unlikely and begun negotiations with other parties, including Juan del Granado’s MSM, the MBL and other traditional parties.
• Second story: The church[es] advocate voting. - In a rare event most of the Christian denominations present in Bolivia (Catholic, Presbyterian, Methodist, Lutheran and Anglican) issued a joint communiqué encouraging voting this Sunday. No official positions regarding certain issues (such as the official religion and religious education in schools) were published at this time.
• In La Patria’s Front page, a good editorial.- "An “ideal” constitution does not and will ever exist".

Central:

• Los Tiempos’ main story: Fear and expectations open electoral day.
• Secondary: AND, MNR and MIR play their last political cards.- Though I doubt any of these parties will cease to exist in the immediate future they do need a decent amount of votes in order to retain their rights as registered political entities.
• Be sure to read Opinión’s special report on the expenses incurred in preparing the Constituent Assembly, $1.5 million only in Sucre.

East:

• El Deber updates twice today, perhaps they’ll even issue a special edition as results come in, so visit their website to stay abreast of the situation in Santa Cruz. Its mid-day edition reports of no unexpected trouble throughout the day.
• El Nuevo Día. - Reports on the OAS observer mission being pleased with the election process so far. It’s also publishing interviews to several analysts.
• Bolivia-Riberalta.com. - Informs of voting stations being transported even by unconventional methods :)

UPDATE (3:12PM EST): In a clear violation of Article 120 of the Bolivian Electoral Code (prohibition of broadcasting of exit poll results until 6:00PM) the MAS-controlled Official News Agency -ABI- has published the results of the first table closing in Sucre. They of course were published because they favor the ruling party and autonomy lost by four votes. Where is this table you may ask? San Roque’s 50-intern Public Penitentiary. Obviously MAS is scrambling to influence the results even if it means breaking the law. As of this writing the official radio station (Radio Illimani, available in iTunes) had also broadcasted the results. Bolpress, a growing Bolivian news agency, makes the same violation, and cites article 120 in the same report!.

Tag: South America, Bolivia, elections, Autonomy, Evo Morales.(Category: Politics)

New Polls are in: ¿Bye Bye Centralismo?

(File under: Politics) CEDLA, the well know Latin American labor and agrarian research institute, has recently published a somewhat comprehensive poll of voting intentions in the urban and rural areas of Santa Cruz, Cochabamba, La Paz and Tarija. The technical details and final results are available at the institute’s website, from which I extract the following:

• The “Yes to Autonomy” vote wins in all of the polled departments – even in urban and rural (!) La Paz. Days away from the referendum Autonomia is no longer a cruceño proposal, though the results of the poll do expose a major Bolivian mindset issue: 10.60 percent would vote for autonomy for some departments, 46.30 percent would favor autonomy for all departments but 42.50 percent would prefer the system to remain unchanged rather than have only some departments enjoy autonomy. (“O hay para todos o no hay para nadie” it seems, which could be worrisome).

• The “Yes” vote triumphs even in rural areas, which tended to vote for MAS an Evo Morales in the last election. It’s worth noting that despite being the head of state –and supposedly neutral to the process- Evo has campaigned alongside MAS candidates, attacked the autonomy movement and its leaders and publicly announced he’ll vote “NO” encouraging his supporters to do the same. And despite all of these efforts, initial polling shows his supporters may vote the other way. In Santa Cruz and possibly Beni and Pando, autonomy will win by a landslide, Cochabamba urban and rural polling also show above 50 percent support for autonomy.
  

Exhibit 1: Voting intentions, key cities (Source: CEDLA):

• It is surprising to see that reasonable expectations of what autonomy will mean for Bolivia do exist.[1] When asked to define autonomy; the majority answered “A new form to distribute the country’s resources” (33.4 percent) and “a new territorial organization” (22.70 percent) no magical panacea in anybody’s mind.

• Not all is good though, with days left to the referendum the majority still believes La Paz will be somewhat damaged by the autonomic process.

I do not see it that way, just as any other department, La Paz, its citizens, businesses and other social actors can thrive under an autonomous form of government. Centralism, bureaucracy, political corruption and unjustified dominance on the other hand, has no place in the future we want to build. Save “executive intervention” in CNE’s procedures…autonomy will win.

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[1] As opposed to what I call unreasonable expectations by the part of Evo’s voters on the last election –on what he would mean for Bolivia.

Tag: South America, Bolivia, Constituyente, Autonomy, Evo Morales.(Category: Politics)

Half a Million Manifest in Support of Autonomy

The Week That Was: Audiovisual Version

I won’t be posting videos every week but I thought the events of these past days disserved some special attention. The first video (from the upper left to right) is a brief run down of Evo’s speeches this week, in which he attacks the opposition, the church, autonomy movement, the television channel Unitel and the US. The second clip is about a Cuban dissident who’s been living in Bolivia for the past few years and has been very outspoken about the reality under Castro’s regime; in this clip he claims to know of at least six recently-arrived Cuban doctors in Bolivia who have already escaped to Brazil or are in hiding.

This week, president Morales accused the US of sending "covert agents" to Bolivia, and even published the names of some twenty American and european citizens in the official news agency website as “proof”, unfortunately for Evo most if not all of these people were academics or grad students and one can easily find their vitas or curriculums with a simple google search; they include University of Michigan's Carrie Landrum and Denver University Jennifer Hennessey among others. The ridiculousness of this claim did not stop the rapid diffusion of this news item internationally as some 70 US newspapers have reported on it. Perhaps we should add a new caveat for US tourists and visiting fullbrights in those Lonely Planet guidebooks: be ready to be accused of working for the CIA by none other than the Bolivian president!

Meanwhile, television channel ATB has been carefully following the issue of Venezuelan military presence in Bolivia and recently informed of a new group of Venezuelan pilots arriving to Bolivia, they presented a video of the troops and attempted to interview some of them. Finally, one big story was published by La Prensa and quickly addressed by the executive; it talks of a possible “split” of opinion and confidence between the president and the vice-president Alvaro García Linera.

A though set of news for only one week, and surely there's more to come.

(File under: Other) On a blog-related side-note, I’d like to thank Ciudadano K for his kind words about my blog in his website; he apparently likes my writing style. Also the folks at Medicina Cubana for having taken up and republished my article on their blog, though global voices confused authorship when citing it; Guccio’s also commented on the article and posted a related note; he clearly got what I was trying to say – which some people didn’t. I’m not attacking the Cuban doctors in Bolivia or their intentions, I’m questioning how their labor is being used to generate propagandistic announcements and further a confrontation with Bolivian health professionals. Finally, I should have mentioned Miguel’s commentary on my oil nationalization article a long time ago.

Ok, so after noting all those accolades, my turn to make a couple: do check Marketing SOS, finally…I’m no longer the only one blogging about Bolivian business-related topics... or maybe I was never the only one nor the first one: here’s to Finanzas Globales, which is registered in Bolivia, though my attempts to reach the author have been foiled so far.

That’s all, I may post something tomorrow, there is a lot I want to write about.

Tag: South America, Bolivia, Cuba, Venezuela, Evo Morales.

The opposition Speaks on the Issue of Venezuelan Military Aid

I recently opened a Youtube account; which I will use to post relevant news items or clips. I'm using this account in conjunction with another project of mine (FAB-EXTRAOFICIAL) so if you decide to browse the collection don't be surprised by the large number of military-related videos.

Tag: South America, Bolivia, Venezuela.

Pro-Autonomy Television Spots

Non-Solicited

Tag: South America, Bolivia, Autonomia, Santa Cruz.

Súper-Médicos

Según una entrevista al Embajador de Cuba Rafael Dausá, desde la llegada al país de 590 médicos [1] (o “técnicos en medicina” como son titulados ultimamente) cubanos hace tan solo tres meses y unos días a la actualidad, han sido atendidas por ellos cerca de 570 mil personas, “a miles de las cuales se les salvó la vida” y de las cuales 7,300 recuperaron la vista en nada fáciles operaciones oftalmológicas [2].

El número es en realidad sorprendente: 570,000 personas atendidas desde fines de Febrero -cuando se autorizó la entrada de este personal debido a la época de inundaciones [3]. En este lapso ha transcurrido 72 días hábiles, asumiendo que todos los médicos invitados trabajaron todos los días esto hace 7,917 atendidos por día (una tasa de 13.4 pacientes por médico), asumiendo que la totalidad de este personal esté aquí cumpliendo funciones puramente hipocráticas y no sembrando semillitas de otro tipo.

Más interesante aún, es que si estos 590 médicos continúan atendiendo a la impresionante cantidad de 7,917 pacientes al día, en lo que resta del año habrán curado a nada más y nada menos que 1, 179,633 personas adicionales, llegando a un sorprendente 1,7 millones de atendidos en tan solo diez meses y unos días. Ósea el 21 por ciento de la población boliviana. Sorprendentes cifras, sin duda.

Según el embajador cubano hay déficit de médicos en Bolivia, a pesar de que las universidades bolivianas gradúan cerca de 5,000 profesionales de salud al año, y cientos de ellos se encuentren desempleados o sub-empleados. Entonces, ¿Qué pasa si hacemos como el sugiere, e invitamos 10,000 de estos súper-médicos cubanos a visitar el país? Pues no mucho, ya que según estas cuentas en un día habrían atendido al 989% de la población boliviana.

Con estos súper-médicos cubanos no debería quedar enfermedad alguna en el mundo... o tal vez se trate simplemente de diferencias entre los hechos reales y la contabilidad castrista, que pena que los bolivianos nos estemos tragando el cuento.

Notas:

[1] Las cifras varían, algunos citan hasta 700 “médicos” en el país, por los que cito a lo mencionado por el embajador Dausá. El status y calidad profesional de estos señores también es desconocido, ya que no existe ninguna verificación independiente. http://www.erbol.com.bo/05-06-06cuba.htm, Junio 6, 2006
http://www.laprensa.com.bo/hoy/ciudad/ciudad04.htm, Marzo 10, 2006.
[2] http://www.econoticiasbolivia.com/documentos/notadeldia/medicocu.html, Mayo 22, 2006.

[3] Nuevamente, estas son cifras distribuidas por el embajador cubano y repetidas por la prensa nacional, es interesante notar que estos señores fueron desplazados a algunas de las áreas de menor densidad poblacional del país, y aún así reportan más de medio millón de atendidos.

Lectura Recomendada:

- Medicina Cubana, Blog del Dr. Eloy Gonzalez (Cubano).

Tag: South America, Bolivia, Evo Morales, Cuba ,todo sea por salir.

Against all odds: Jindal Steel & Power is awarded El Mutún iron ore project

This was a nerve-racking bidding if there ever was one: plenty of controversy, politically motivated-stalling and intrigue, clashing of regional and political interests, mining industry nationalization scares and even a faux ministerial kidnapping.

What started as a highly competitive international bidding of five foreign companies including heavy hitters Mittal Steel Group and Shandong Luneng eventually became a one-player game as other companies deserted the process – or in the case of EBX were kicked out. But now porteños are celebrating, the Bolivian government has just announced the awarding of the project to the sole remaining competitor, Indian materials and energy conglomerate Jindal Steel and Power Ltd. (JNSP.BOM, Website).

The project is expected to generate some 2,000 direct jobs in the area, and important tax revenues to the local and national government. We should also note that natural gas rather than coal will be used in the smelting process.

According to Rediff.com, a popular Indian news site, “industry sources said the Indian company would have to invest $1.5 billion over the 40-year term of the contract. The El Mutun iron ore mines, located near the Bolivian-Brazilian border, have proven reserves of 40 billion tones… the deal will also benefit the Andean country. Its government estimates it can earn about $250 million in iron ore exports every year and employ almost 2,000 people. The operations can help produce up to five million tones of steel annually.”

JSPL is the latest among Indian conglomerates hunting abroad for raw materials. Last year, the country's largest private steel producer, Tata Steel bought a five per cent stake in an Australian coal mine.

El Deber (ED) published a brief interview with Mr. Vikrant Gujral (VG) Jindal’s vice-chairman and chief executive officer, my translation follows:

ED. - What was your first reaction when the government announced the green light for your proposal?

VG. - We’ve been working on this offer for two years, and put all efforts into it, I personally traveled to Bolivia ten times during the past years, to follow the project’s progress. That’s why we were glad and because there is a great sense of responsibility to it.

ED. - What’s the 60-day pause that Jindal asked for?

VG. - That lapse forms part of the proposal requirements.

ED. - What amount of investment is Jindal planning for this project?

VG. - About $2,300 million within eight years; direct and indirect employment generated by the project will reach the thousands, we don’t have a specific number.

ED. - When do you begin operating?

VG. - We are already working; obviously, there are some legal procedures have to complete before we start operating the project itself, for instance congressional approval and once we get that then we’ll begin operating. We are opening an office in Santa Cruz to monitor all contractual procedures and paperwork.

ED. - Is it true that other companies could also start working with Jindal in the iron ore extraction?

VG. - Maybe, we haven’t ruled out that possibility, even though this project will probably generate some start-up companies in the area.

We should be relieved that, while MAS may have hijacked the process from the previous administration (and now gloats over how a “popular, originary government has finally taking upon this project”) at least they were able to garner enough reason to go with it and complete a negotiation, we hope, in Bolivia’s best interest.

Tag: South America, Bolivia, Evo Morales, mining ,Jindal.

Metiendo la mano a todo: Chávez y Morales crearán Minersur

Según informaciones oficiales el “Acuerdo Minero del Sur” (Minersur), será suscrito entre los presidentes de Venezuela, Hugo Chávez, y de Bolivia, Evo Morales, este 26 de mayo en la región del Chapare.

En declaraciones recogidas por la Agencia Boliviana de Información, el titular de Planificación indicó que el proyecto está orientado a desarrollar proyectos binacionales para explotar yacimientos mineralógicos en todo el territorio boliviano. Por eso negó que el ingreso de capitales venezolanos para apuntalar esa sociedad minera tenga por objetivo explotar los yacimientos del Mutún, tal como se informó en algunos sectores opuesto a la administración gubernamental.

Ese jueves 25 se procederá a la apertura del sobre A, el sábado 27 el sobre B (propuesta económica) y el 30 de de mayo se adjudicará la explotación de ese proyecto siderúrgico. Villegas explicó que la fecha están en carrera las empresas Jindall Still and Power (India), Mittal Steel Group (británico-holandesa) y Techint-Siderar (Argentina).

El ministro Villegas reconoció que un proceso de licitación tiene dos desenlaces: habrá un ganador y un perdedor y el gobierno está jugando a ganador, es decir, adjudicar el proceso de licitación a una empresa ganadora. [A menos que estas empresas retiren sus propuestas, como ya lo han hecho varias otras].

Tag: Bolivia,mining,commodities,Mutun,VenezuelaEvo Morales

Land Reform in Bolivia: A Picture of What's to Come

The image to the left of your screen illustrates a pattern that is actually recognized by the United States' National Aeronautics and Space Administration (NASA) as unique to Bolivia.

The image was taken in 2001. A side-by-side comparison of what the place looked like in 1986 and 2001 can be found by clicking here. [1]

What does this photo show? Nothing but the effects of increased migration from the Altiplano to the Santa Cruz lowlands, and the application of Aymara production and land distribution techniques. The pie or radial patterned fields are part of the San Javier resettlement scheme. They are the visual translation of Andean communitarism imported to the Eastern part of the country.

You shouldn't be surprised by the fractioning of the land, this is a common feature of "ancestral" altiplanic methods of production. In post-colonial altiplano, land is/was inherited in such a fractional manner, and of course, with time, efficiency began to suffer. Eventually the mini-fundio became commonplace and nowadays, some communities subsist even under a "surco-fundio" system[2]. The pattern is being replicated in the Bolivian lowlands, despite the availability and knowledge of alternative production methods, we can only expect the same ultimate result for any redistributed lands. The fields illustrated in the photograph are not producing soybean or any other "cash crops" such as rice or wheat, they are too small for efficient production. [3]

What's next? As you read this, the Morales government is preparing the second (or third) Land Reform in Bolivian history, 4.5 million hectares (about 17,375 square miles - the size of the states of the state of Massachusetts and New Jersey combined) are to be redistributed to the indigenous poor, the same folks who are now eking an existence in the communities such as the one seen above, or are just about ready to abandon their minifundios in the altiplano.

Other than property rights being obliterated, what worries me are the upcoming decreases in national food production once the fields targeted for reform are fractioned redistributed. Not to say anything about the actions that the current legal owners could take. Should we prepare ourselves for land reform a la Zimbabwe?[4]

Alvaro Ruiz has more on the topic.

Notes and Sources:

[1] Detailed explanation is available in the following website: <http://asterweb.jpl.nasa.gov/gallery-detail.asp?name=bolivia>
[2] Surco is refers to each of a field's furrows. Under a "surco-fundio" each row has an owner.
[3] Efficient land use: <http://veimages.gsfc.nasa.gov/1562/tierras_baja_strip.jpg> targeted for land reform.
[4] More on "Fast Track Land Reform" in Zimbabwe: <http://www.hrw.org/reports/2002/zimbabwe/>

Tag: South America, Bolivia, Evo Morales, Land Reform.

Formerly the Journal of Bolivian Business & Politics

For the few of you who may read this blog on a regular basis, you may have noticed that I've changed the site's title to a much simpler one. The main reason being that most of my visits come from search engine results and I don't want any newbie to have the impression that this is anything other than a humble personal web log. The second reason is that the original name was kind of cumbersome to cite and/or link.

World GTL: A Profile

On May 15 the Bolivian state-owned integrated oil services company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and New York-based private developer World GTL (WGTL) signed a letter of intent to begin a feasibility study for the construction of a "Gas-to-Liquids" plant in Bolivia[1]. David Loring, President and Chief Executive Officer of the company and Jorge Alvarado, YPFB's "Interim" President signed the document on a public ceremony.

But just who is World GTL?

Not much financial information about WGTL is available, given that it is a privately-held company (meaning that they don't trade their stock in any exchange and are not regulated by the Securities and Exchange Commission). However, there are some precedents to their activities.

The company was founded in 2000, according to a somewhat obscure UFTO Note[2] :

"Their [business] plan is to acquire ownership rights (in some cases production rights) to certain stranded gas fields at deeply discounted prices, and capitalize on
opportunities that now exist to convert these "stranded" natural gas fields into
synthetic petroleum products.

Why don't the major [oil & gas companies] do this themselves? They do hold on to larger fields and may eventually develop them as LNG sources (or increasingly, with GTL), but they have no interest in smaller fields, e.g. under 3 tcf. This leaves a huge opportunity for players like World GTL. In fact, majors have already said they'd license their GTL technology and help with plant financing. (...) Turning Stranded Gas into Proven Oil Reserves World GTL has come up with an interesting strategy. Once the development is done on a project (i.e. secure gas rights, do site plan, license technology, do preliminary engineering, arrange financing, sales agreements, etc.) previously stranded gas reserves with little to no value will essentially have been converted to "in the ground" gasoline and diesel inventories which can be easily monetized in the international oil market. (...)"

An interesting strategy, and certainly a workable one in Bolivia, were many natural gas fields are of very limited size. But if we are talking about the San Alberto or Margarita fields (some of the largest single-location fields in South America) I think they may be "stranded" in a different, more political sense, and perhaps a different type of partner is needed for developing those fields.

World GTL, has had successes in the past, they developed one of the contintent' first GTL plants in partnership with Petrotrin, the Trinidad & Tobago petroleum company (which took one third of the equity in the project) and Guardian Holdings which took an equity stake in the project through its alternative energy Prometheus Fund .

As far as management goes, the company was founded by a number of former executives of some major oil companies, many of whom currently have a management position, including:

• Gordon H. Barrows, Chairman. Mr. Barrows has advised the United Nations, the World Bank and numerous governments and petroleum companies on petroleum matters. He is also Chairman of the Barrows Company, an international petroleum information company.
• David Loring, President and Chief Executive Officer. Previously involved in petroleum development and production projects with ARCO and major international projects with the General Motors Corporation.
• James Higbee, Vice President, International. Previously Managing Counsel for Squire, Sanders & Dempsey in Almaty, Kazakhstan; prior to that worked 18 years at ARCO, including as Director, International Negotiations and Contracts.
• Peter Tijm, Vice President of Technology. Twenty-eight years with Shell, including the Bintulu GTL plant.
• Leigh Noda, Chief Operating Officer. Mr. Noda has over 30 years of experience in the management of international petroleum refining operations with ARCO.

In light of this information, WGTL seems to be an interesting partner for some of the nation's projects. One could argue it lacks the capabilities to develop some of the larger projects, but their sole presence in Bolivia is a welcomed sign post-nationalization.

Notes and Sources:

[1] "Gas-to-Liquids"is a refining process that converts natural gas or other hydrocarbons into diesel fuel. It's a somewhat costly process that yields a cleaner "greener" fuel. Given Bolivia's diesel refining deficit and considerable demand -currently supplemented by imports from Argentina and Venezuela- the option of adopting the GTL method has been studied for many years.

[2] UFTO is a California-based advisory group that conducts "studies on behalf of a select group of energy utilities and vendors, to seek out technologies of interest and to facilitate collaborations among utilities, government and private companies." The complete article is found here, as of May 16, 2006.

My Hoovers and LexisNexis searches are yielding little results, this is it for today.

Company Websites: YPFB , WGTL , Petrotrin, Guardian Holdings, The Barrows Company .

Tags: Bolivia,Bolivian, oil, GTL, World GTL.

Nationalization in Bolivia: Will Foreign Oil & Gas Companies Suffer?

Why the big guns, does he fear Lestat is coming?

Yesterday evening President Evo Morales made good of his campaign promise of “nationalizing” Bolivia’s oil and gas resources. Via an official decree President Morales ordered the military to “occupy” foreign-operated gas extraction plants, refineries, and gas stations. He even addressed the country from the grounds of the Petrobras-operated San Alberto field, while heavily guarded by members of the US-trained counterterrorism task force Fuerza 10 [1] and a gleeful cadre of ministers, including nationalization “mastermind” Andrés Soliz Rada. While due to its now bore-some rhetoric his speech is not worth dissecting, the resulting official decree, the legal basis for any future nationalization plan is. However, I will leave that post for later this week, when we may have more information.

In this post I only want to report on the reactions of some of the companies directly affected by the announcement and the market’s reaction to the event itself:

§ Repsol (NYSE:REP).- Spain’s Repsol is the most exposed Western oil company in Bolivia, they operate some 30 fields. Bolivia is the source of 18 percent of the Madrid-based firm's reserves and 9 percent of its production. However, after the big write-down in the value of these assets in January (See the post about this here), the actual impact on Repsol is less than the reserves and production figures would suggest. Repsol ADR’s opened down three percent today and closed at a slight negative. In Madrid, the company’s stock recovered during the day and closed higher than the prior day. Repsol’s press release states that the company is evaluating the viability of renegotiation (link here).

§ British Gas (LSS:BG).- Shares of BG Group, which holds three fields in Bolivia including the Margarita field, also opened lower this morning. Bolivia only accounts for 3 percent of BG’s production and 4 percent of reserves. The Company did not issue a press release regarding the issue, though more information about its operations in Bolivia is available here.

§ Pluspetrol Energy. - The company holds 6 fields, including the Madrejones camp, it’s more invested in the Peruvian Camisea project than in Bolivia and did not issue an statement. It's operations in Bolivia function under the Repsol umbrella. It was not immediately affected by the events.

§ Total (NYSE:TOT). – Bolivia represents less than one percent of the company’s reserves, and its stake in San Alberto is shared with Petrobras. The company did not comment on the issue. It’s stock was not affected by the events

§ Vintage Petroleum (A subsidiary of Occidental Petroleum Corporation NYSE: OXY). - It currently operates three fields, the Bolivian operations represent a marginal segment of its South American operation, and there was no release for the company regarding this issue. This is the only US company significantly involved in Bolivian gas extraction. (Exxon-Mobil has gas transport operations)

§ Petrobras (NYSE: PBR). - Brazilian company Petrobras holds small but very public stake in Bolivia, its investments there yield only 2.4 percent of its output and form 2.8 of reserves. However dire the situation may look, Petrobras is in a position to actually profit from the current situation. Under the current administration, renegotiation of contracts will benefit a selected few, and depending on the company's decision or intervention from Brazilian president Lula da Silva, Petrobras may be one of them. As I have stated elsewhere in this blog Petrobras has a competitive advantage in not being a European or American company. Surely it’ll never be able to pull the same weight as an Exxon-Mobil but it is a force to be reckoned with in South America. Petrobras is a “politically correct” candidate for partnership under the awry rationale of the current administration - where the red dye of banners surpases logic. Now will Petroleo Brasileiro take over when Repsol finally decides enough is enough? Or will PBR go the other way and take Bolivia off line?

As far as the immediate reaction of the market, we can see that firms were quick to clarify their exposure in Bolivia and investors took note. Even Repsol, which would come out the greatest loser from a far-reaching expropriation, does not depend on Bolivia for its profitability. While other affected companies, namely Petrobras, stand to gain from this turn of events.

It’s not clear how far this “nationalization” will really go; as far as I’m concerned, this is nothing but the long needed and awaited contract-renegotiation under a populist guise. Production is only being channeled through YPFB while administrative control of infrastructure remains on foreign control until negotiations start.

And judging by the text of the initial decree, the only asset that has truly changed hands, are the millions of Andina, Chaco and Transredes shares owned by Bolivian citizens themselves in their pension funds, which have now being transferred for free to the MAS-controlled YPFB coffers. No clue on what that money will be used for, and with that source of income offline lets hope Chavista aid keeps flowing to pay the Bonosol, or Morales is going to see first hand that expropriation is not “the answer to all of our miseries”.

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Note:[1] The only reason why I point this out is because this elite unit was compromised by Morales himself when earlier this year he practically cut its US funding and training. It's personnel had been allegedly involved in the controversial transfer of Man Portable Missiles to the US, an operation that tarnished it's reputation and pride. By placing them along his side in this very nationalistic ocassion, is Morales trying to rebuild their persona as his own little shock troops? Afterall they are not supossed to do guard duty...

Tag: Bolivia,Bolivian oil,Repsol,Petrobras,Oxy,Evo Morales,Exxon,oil.

Nationalization in Bolivia: Are Foreign-Operating Mining Companies Next?

In light of the recent “nationalization” of Bolivia’s hydrocarbons we should examine whether the threat of expropriation also risks other foreign companies exposed to events in Bolivia, while Morales claimed in his fiery “nationalization” speech that mines and land were next, only to be contradicted by his vice-president in a radio address hours later, the reality may differ.

Apex Silver Mines Limited (Amex: SIL) today responded to unusual trading activity (I’m guessing the shorts are having a field day) arguing that the government does not plan nationalization of mines, this contradicts the president’s own comments, but Apex has a good point – the Bolivian Minister of Mines and Metallurgy has repeatedly commented that no nationalization of the San Cristobal mining project is planned. I wouldn’t count my chips yet, though the company is doing an impressive job addressing social needs of communities surrounding the mine and it’s starting to diversify its production in other South American countries, the concern is also 100% foreign owned and more than 50 percent managed by international personnel. Which makes it a prime target for Morales’ populist rhetoric, add to the mix the rising prices of precious and other minerals and the fact that the mine starts operating only in 2007 and you have a target of opportunity. At the close of the market today Apex Silver shares had sunk by $3.30 (U.S.) or 16 per cent.

Vancouver-based silver producer Pan American Silver Corp (NASDAQ: PAAS), which has a 55-per-cent interest in San Vicente, a small silver-zinc mine in Bolivia, also issued some comments, stating that they have been holding off investment on the mine due to political risk. Pan American shares fell by 1 per cent to close at $26.72 on the Toronto Stock Exchange.

Coeur d'Alene Mines Corp (NYSE:CDE) the company developing the San Bartolomé project had its shares fall by 57 cents or 8 per cent to $6.31 on the New York Stock Exchange. However, this company is somehow less exposed to instability as it manages sub-leased concessions owned by the state-run company COMIBOL and a number of cooperatives.

Though foreign mining companies are also exposed to expropriation risk, the threat is smaller than it was for gas and oil firms, and even other formerly state-run enterprises. As John Carlesso, chief executive officer for Toronto-based Apogee Minerals Ltd (TSX:APE) stated, oil and gas development; generate relatively few local jobs and results in a product that is exported at well below market rates. By contrast, a mining project can create thousands of jobs and typically requires substantial investment in infrastructure such as roads and power plants that Bolivia wants for its own economic agenda [1].

Looks like it’s more a matter of keeping the miners and the COB leadership happy, a similar relationship exists elsewhere in our continent, in the land of Bolivar, where the populist coronelisimo maintains a pretty good relationship with gold-mining company Crystallex International Corp (Amex: KRY) banking that the new jobs created by this North American company will prolong the sustainability of his regime.

At least in the short term, there is no strong signal that the Morales government is willing to “nationalize” foreign-operated mines –with the glaring exception of the recent EBX neutralization. The cynic in me tells me that Morales is waiting until the big projects start being profitable and all costs have been covered before he makes a move, but I think he’ll have his hands full dealing with the gas and oil expropriations.

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Tag:Evo Morales,nationalization,expropiation,Apogee, Apex Silver, mining