La Paz, Bolivia – The president of Bolivia’s state-owned oil company YPFB confirmed on Thursday that Brazil’s Petrobras will receive compensation for the nationalization of its two refineries in the Andean country.
“It has never been said that the nationalization is confiscation,” said Jorge Alvarado.
He explained that the state, acting through YPFB, is seeking to take majority control over the two refineries and that to do that, logically, it will make a valuation of the assets so as to be able to pay for them.
The energy plants are located in the city of Cochabamba in central Bolivia and Santa Cruz in the east, and Petrobras bought them in 1999 from the Bolivian government for $102 million.
Alvarado commented hours after Brazilian President Luiz Inacio Lula da Silva said that the Bolivian government must compensate Petrobras for the assets in question.
“President Lula, in giving his opinion, reveals precisely what we want to do,” the YPFB chief told radio Erbol in La Paz.
The amount of the compensation will be determined through a reconciling of accounts, given that when the two refineries passed into Brazilian hands there were pipes and stored fuel on the premises on which no value was set at the time, Alvarado said.
The two companies are continuing their negotiations on the conditions of the transfer so that the Bolivian energy firm can take control of the management of the refineries nationalized on May 1.
In an interview earlier Thursday with Radio CBN, Lula said that La Paz had every right to nationalize its natural resources, but he added that if it was also proposing to bring under Bolivian state control the assets of Petrobras it must indemnify the firm.
“They know they will have to pay the price” of those assets, the president said.
The local Petrobras affiliate is the main firm operating in Bolivia and after the nationalization of the energy sector decreed by President Evo Morales on May 1 the firm may lose about $1 billion in assets in its petroleum and natural gas activities.
In the interview, Lula criticized his country’s heavy dependence on gas from Bolivia, which provides almost 60 percent of Brazil’s industrial, commercial and residential consumption of the fuel.
“The serious thing is that a country like Brazil has become dependent on the gas from Bolivia. We lived up until 1998 without that gas,” he observed.
The president, who is running for reelection, said that Brazil would be completely independent of imported energy products by 2008.
“After the problem with Bolivia occurred, we had a meeting of the National Energy Policy Council and we decided that (by) 2008 we’re going to stop being dependent,” he said.
The governments of Brazil and Bolivia, via their state-run petroleum firms, are engaged in a commercial dispute regarding the prices of the gas that Bolivia supplies to the Brazilian market.
The Morales government is demanding that Brazil pay the same price for its gas that prevails in the international market for much more expensive liquified natural gas.
Brazil, however, insists that the two countries have a contract that remains in force until 2019 establishing periodic adjustments to the price in accord with a formula established in 2000 after the construction of a binational gas pipeline.
