A decree issued by Morales orders foreign energy companies to agree to new contracts with Bolivia’s state-run company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 180 days. During this time all energy companies producing more than 100 million cubic feet of natural gas daily would receive 18 percent of revenues, with 82 percent going to YPFB. “At the end of this period, companies that do not sign new contracts will not be able to operate in the country,” Morales stated.

In demonstrations and roadblocks across the country last year, prior to the election of Morales, the candidate of the Movement Toward Socialism, workers and peasants demanded nationalization of the oil and gas reserves.

Bolivia has the second-largest natural gas reserves in Latin America, after Venezuela, with an estimated 54 trillion cubic feet. About 25 energy companies have investments in Bolivia. The biggest operators are Petrobras of Brazil and Repsol of Spain. Others include British Petroleum, Total of France, and the U.S.-based ExxonMobil. About half of Brazil’s natural gas needs—520 million cubic feet daily—are supplied by Bolivia through a 2,000-mile pipeline operated by Petrobas.

“‘Obviously there are concerns’ about a ripple effect,” said the May 2 Wall Street Journal in a front-page article, quoting ExxonMobil spokesman Robert Davis. Foreign investors said they were cautious on what the move would mean for their businesses until they saw what the renegotiation of existing contracts the government has ordered brings about.  
 
 
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