More than midway through Bolivia's schedule to nationalise its energy sector, the government of leftist President Evo Morales is mired in competing foreign and domestic interests and budget problems.
Bolivia's first indigenous president, Morales moved swiftly after taking office in January to make good on campaign promises to improve social justice in a society long dominated by the legacy of European colonialism.
On May 1, he set a six-month deadline for an ambitious nationalisation of oil and gas resources to recoup energy revenues for the benefit of the people of South America's poorest country. That date, army troops seized control of oil and gas sites and foreign companies were given 180 days to renegotiate their contracts with the state oil and gas company Yacimientos Petroliferos Fiscales Bolivianos. YPBF thereafter will become the majority shareholder in energy companies operating in Bolivia.
Bolivia holds the second largest South American reserves of natural gas after Venezuela, and the measure affected 26 foreign companies including ExxonMobil, Repsol, Total, Petrobras and BG Group.
Now, with the November deadline fast approaching, the nationalisation plan is bogged down, particularly with the country's key investor and trade partner, Brazil.
Bolivia exports some 25 million cubic meters of gas a day to Brazil, which covers half of the South American powerhouse's gas needs, while Brazil is the largest investor in Bolivia's oil and gas sector and controls about 14.5 percent of the country's gas reserves.
The Bolivian government and Brazil's state-owned Petrobras are negotiating a price readjustment for the gas Bolivia supplies to Brazil, in Bolivia's favour, as well as the company's adherence to the nationalisation decree.
However, bargaining complications have prompted the Bolivian government to propose the parties resolve their differences at the top - with direct talks between Morales and his Brazilian counterpart Luiz Inacio Lula da Silva. Lula has rejected this solution.
A last-ditch possibility of international arbitration, floated by Bolivia's energy minister, Andres Soliz, was flatly rejected by Petrobras, which accused La Paz of unilaterally breaking off negotiations.
In addition to agreeing a gas price, the negotiators are seeking common ground on Petrobras's demands for legal security guarantees and compensation for the investments it has made in Bolivia since the 1990s.
The bilateral dispute already has dented Bolivia's budget outlook: Petrobras has slashed its planned 2007-2001 investment in Bolivia to 90 million dollars, from two billion dollars.
The Bolivian government also has run into difficulties with a hearing process to determine whether the 20-odd oil consortia that operate in the country invested 3.5 billion dollars since 1996, as their contracts require.
In another conflict, the government threatened to take legal action against the subsidiaries of Petrobras and Spanish company Repsol YPF for alleged manipulation of gas exports to Brazil, that Brazil claims cost it 160 million dollars.
According to Soliz, Petrobras-Bolivia and Repsol's Andina did not apply a progressive adjustment formula for price swings on the global oil market that was part of a gas trade agreement signed by Bolivia and Brazil in 1999, which froze the value of the Bolivian exports.
On the domestic front, there are rising rumbles of doubt that Morales's nationalisation program will work.
Senator Carlos Borth, of the opposition party Podemos (We Can), questions the plan's validity, saying "the supposed nationalisation is a simple purchase of shares in the oil companies."
"In Bolivia, nationalisation as we understand it is an act of removing a foreign private enterprise from the country and entrusting the state with the production activity to which it (the company) was engaged," Borth said.
More than three months after the nationalisation decree, none of the oil companies concerned "have gone from their old contract to the new ones," he said.
"If this is not resolved, the chaos in the sector will be deadly."
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