Bolivia’s Energy Nationalization Reform has Made Breakthrough Progress

Bolivia's state-owned Petroleum Mining Company signed new contracts with two foreign energy companies on the 27th, fully nationalizing the oil and natural gas resources owned by these two companies in Bolivia. Outsiders believe that this marks a breakthrough in Bolivia's energy nationalization reform.

The two foreign energy companies are Total-Fina-Elf, a joint venture between France and Belgium, and Vintage Petroleum Company of the United States. According to the new contract, the two companies recognize that the Bolivian government has absolute ownership of the country's oil and natural gas resources and will hand over 82% of the oil and natural gas produced to the Bolivian government in the form of taxes. In addition, the two companies have committed to continue investing in the Bolivian energy sector over the next 20 to 30 years for the exploration and extraction of oil and natural gas.

Bolivian President Morales expressed satisfaction with the signing of the new contract. From now on, foreign energy companies are no longer owners of Bolivia's oil and gas resources, but partners, he said. At the same time, he also urged other foreign companies to follow this approach as soon as possible.

The two contracts were signed just one day before a deadline set by the Bolivian government, while major foreign energy companies such as Petrobras remain on hold. According to regulations, if foreign energy companies fail to sign new contracts before the 28th of this month, they must leave Bolivia.

On May 1 this year, Bolivian President Morales issued a supreme decree declaring that oil and natural gas resources would be nationalized. This policy has been strongly resisted by foreign energy companies.

Bolivia is the second largest natural gas producer in Latin America after Venezuela, with currently proven natural gas reserves of 52.3 trillion cubic feet (1 cubic meter is approximately 35 cubic feet) and proven oil reserves of approximately 929 million barrels.