Latin America demands more for its oil and gas

Gas-rich countries like Bolivia are rolling out plans to nationalize energy reserves.

By Sara Miller Llana | Staff writer of The Christian Science Monitor

from the April 10, 2007 edition

Page 1 of 4

Santa Cruz, Bolivia - Forty miles in from the eastern city of Santa Cruz, down a rough dirt road lined by nothing save a few crude homes and the odd cow, stands a jungle of shiny silver and yellow tubes and tanks.

It's the property of the Spanish gas and oil company Repsol YPF, which earned $4.1 billion in net revenue in 2006 and is processing natural gas from nearby wells and pumping it via pipeline throughout Bolivia and Brazil.

It's this disparity between the wealth of the big foreign companies and the poverty of the local population that Bolivian President Evo Morales sought to reduce when he "nationalized" the country's natural gas industry by sending federal troops out to gas fields last May, insisting on more revenue from foreign operators. Bolivia has Latin America's second-largest gas reserves but is one of the region's poorest countries.

Mr. Morales joins other energy-rich Latin American nations in claiming more from – and depending less on – international investors and institutions, a movement led by Venezuela's President Hugo Chávez.

In multiple elections last year, voters in the region overwhelmingly rejected the orthodox free-market policies of the past few decades by electing leftist leaders.

But as their new leaders respond, critics say that moves to nationalize gas and oil industries could chase away investment from multinational energy firms, which could prove devastating for the region's developing economies. Others say this is an experiment in developing a new model: one that mixes nationalism with a healthy dose of corporatism.

"Right now, Latin America is a continent with a political expression looking for an economic model," says Roger Tissot, director of country strategies at PFC Energy, a consulting group. Countries are not forcing foreign companies out as they did in the 1950s, but they aren't being bullied by the US either, he says. "The region is taking some of the lessons from the 'Washington consensus' [that championed privatization], but also some of things they think worked in the previous model. It is trial and error."

Page 1 | 2 | 3 | 4 | Next Page