EU says 'concerned' over Bolivia's energy sector nationalization

London (Platts)--2May2006

The European Commission said Tuesday it is "concerned" by the Bolivian
government's decision to nationalize the country's energy industry which
lacked consultation with foreign oil companies.

"The commission noted with concern the decision taken which nationalizes
Bolivian [oil] industry," a spokesman for EU's energy commission told
reporters in Brussels. "We hope that before the decision is actually taken,
any proposal will be discuss and that consultations will take place on it
before it is adopted."

Morales said Monday that his government will gain 82% of all proceeds
from every Bolivian gas property that produced more than 100,000 Mcf/d of
natural gas during 2005, leaving just 18% of the proceeds from Bolivia's
largest fields to the majors that have been operating them.

Petrobras, Repsol YPF, BG, BP, and Total, in charge of Bolivia's biggest
gas fields, are likely to strongly object to the new terms. Majors have
invested about $4 billion in Bolivia, mostly to develop the kind of large
fields that produce more than the 100,000 Mcf/d quota.

Companies must "migrate" to the new contract terms within 180 days,
Morales warned, or they will be booted out of the country. The Bolivian
government previously had pledged to renegotiate contracts with oil companies
on a one-by-one basis.

"The commission will consider the impact on of the decision on Bolivia
and foreign investment," the spokesman said. "We would have liked to see here
a process of prior consolation and discussion on any proposals before there
adoption."

He said Bolivia's decision would not have an impact on European oil and
gas supply but said it could have a "negative impact on oil market, because
the markets are subject to considerable pressure as far as prices is
concerned."

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