'Finally, the Bolivian government has passed an important milestone.'

In the days of increased concern about climate change, Martin Piper looks at the way that Bolivia is benefiting from its natural resources.

Evo Morales, Bolivia’s first indigenous president, came to power in December 2005 pledging greater state control of the country’s oil and gas assets and a greater share in the profits accrued from Latin America’s second largest reserves after Venezuela.

After a difficult year of negotiations that brought demonstrations to the streets, political turmoil within numerous departments and the resignation of countless energy ministers, it seems that finally the Bolivian government has passed an important milestone.

A deal was made late on Wednesday 21 st February with the Brazilian state oil company, Petrobas, the last in a line of oil giants to accept nationalisation and renegotiate contracts with the Bolivian government.

Other deals were earlier signed with multinationals such as Total of France, Vintage from the US, Repsol YPF of Spain and Britain’s BG Group after they were given 180 days to renegotiate or leave the country.

Revenues

The Bolivian state oil company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB) aims to bring Bolivia an extra $120 million in annual gas revenues. Petrobas was the most important player, as it is the biggest investor in Bolivian oil and gas.

The country’s known natural gas reserves are 26.5 trillion cubic feet with a probable 22 trillion more in unexplored territory.

The recent news has boosted the popularity of Morales to 65%, an increase of 6 points states Bolivian daily La Razon. An independent survey reported that 80 to 85% of Bolivians support nationalisation.

It has not been an easy road however, in November last year, the government passed a bill allowing greater scrutiny of departmental accounts and giving the senate powers to sack governors.

An essential move against fraud said the government as more money would be handed out to each department. This lead to six disgruntled governors, of the nation’s nine departments, breaking ties with the central government and the two opposition parties walking out of the senate.

Earlier in the year, YPBF admitted it was unable to come up with enough money to buy controlling stakes in oil and gas assets leaving it short of the 51% of shareholdings required.

Disagreements

Numerous energy ministers resigned due to the rocky negotiations and disagreements with either the government or Petrobas, another was sacked amidst corruption allegations.

In January, demonstrators blocked road links to Argentina and Paraguay saying that nationalization had not gone far enough, demanding more state control of the industry.

Many protesters still object to the fact that Morales has renegotiated contracts instead of taking control of operations.

However despite these setbacks, as political analyst for La Razon reports, Evo Morales has achieved what previous administrations considered impossible by renegotiating contracts and securing higher prices for oil and gas.

The president broke protocol to personally negotiate with his Brazilian counterparts to achieve his objectives.

Brazil ’s president Luiz Inacio Lula de Silva stated that he recognized the justice of Bolivia’s demands and expressed solidarity and generosity to help in the development of it neighbour.

“This is a strategic association for the commercialization and industrialization of Bolivian energy,” he said, promising technological assistance and the transfer of experience.

This combined with an earlier promise from PDVSA, Venezuela’s state oil company, of $1bn to help the Bolivian industry puts the government of Morales in good stead to achieve its aims for nationalisation and greater distribution of wealth among Bolivia’s poor.

Martin Piper is a former employee of Christian Aid who now lives and works in South America.

These are personal comments and not necessarily the position of Christian Aid or its partners.

• Read other columns from Martin Piper