• Categories
  • Archives

Brazil Asks US$ 200 Million But Gets Half from Bolivia’s Oil Privatization

Bolivian police guards Petrobras installations in Bolivia Bolivian police guards Petrobras installations in Bolivia

Bolivian police guards Petrobras installations in Bolivia After an acrimonious dispute over the nationalization of two oil refineries in Bolivia owned by Petrobras, the Brazilian government-controlled oil group, Bolivia and Brazil have reached agreement.

The agreement on the price to be paid for the assets fell short of what Petrobras said was their market value – the company had asked US$ 200 million at first – and is likely to put a freeze on any future investment by Petrobras in Bolivia's natural gas industry, currently the main supplier to Brazil's fast-growing market.

"Petrobras will have to think very carefully about any future investments in Bolivia," said Adriano Pires, an oil industry consultant in Rio de Janeiro. "Unfortunately it has no way of leaving the natural gas industry because Brazil is a hostage to Bolivian gas."

Brazil had threatened to take the issue to the World Bank's International Center for Investment Disputes, the main international forum for dispute settlement on cross-border investments.

Bolivia's response was to announce its withdrawal from the organization earlier this week. It said it would encourage other governments in South America to follow, adding to concerns over the investment climate in the country and the region.

But the agreement was accompanied by a surprise announcement by Braskem, a Brazilian petrochemicals company controlled by Odebrecht, a construction group with operations in other politically unstable countries. It said it had reopened talks this week on a petrochemicals plant in Bolivia first proposed in 2003.

Bolivia agreed to pay US$ 112 million for the Petrobras refineries, more than its original offer of US$ 40 million but a long way short of Petrobras's target of US$ 200 million.

Petrobras bought the refineries at privatization in 1999 for US$ 104 million and has since invested almost US$ 20 million in modernization. The price also includes stocks of refined products said to be worth US$ 40 billion.

"This is the third defeat for Petrobras in the past year," said Mr Pires. First was Bolivia's nationalization of its hydrocarbons industry on May 1 2006, and an accompanying sharp increase in taxes paid by foreign operators.

Second was a sharp increase in the amount Petrobras pays for natural gas from Bolivia, imposed by the Bolivian government in February. Bolivia said it would begin charging for higher-value gases that are contained in the mix of gases supplied to Petrobras but which the Brazilian company does not separate out. The need to find a use for these gases is understood to have reawakened Braskem's interest in its petrochemicals project.

Petrobras has assets valued at about US$ 1.5 billion in Bolivia's natural gas industry, including production facilities at two gas fields and a gas pipeline with capacity to deliver 30 million cubic meters a day to customers in Brazil.

Since Bolivia's nationalization, Brazil has increased the speed of investment in its own natural gas resources and announced plans to build facilities to import liquefied natural gas.

Mercopress

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Furtado Left Brazil Moral Orphan

When an intellectual dies, we remain his or her disciples, when a political leader ...

71.3! Expect to Live that Much if You Are Brazilian

The life expectancy of both men and women who were born in Brazil in ...

Brazil’s Lula Promises No Stone Unturned in Corruption Probe

Brazilian President Luiz Inacio Lula da Silva promised Monday that in the fight against ...

Brazil Convention: Countries Far from Consensus on Traditional Knowledge

The protection of traditional knowledge is one of the main themes that have been ...

Tarciso

The dreams started to become confusing: those men full of open wounds would get ...

Cafechocolat Café in China has Brazilian capital

Brazilians and Chinese Find Out How Tasty Brazil’s Coffee Is

Brazil is the world’s second largest consumer market for coffee. Last year, Brazilians drank ...

Brazil Exports Grow to Record US$ 137 Billion, 16.2% More than in 2005

Brazil’s trade balance had its second best monthly performance in 2006 in December, which ...

The B-Files

The intends to foster awareness and appreciation of Brazilian history as a national archive ...

Brazil and Pakistan Ready to Increase Business

Brazil’s President Luiz Inácio Lula da Silva received, today, the President of Pakistan, Pervez ...

The WTO Battle Lost, Can Brazil Still Win the War?

In a statement made last week by Foreign Minister Celso Amorim, Brazil has withdrawn ...