Bolivia's natural gas reserves instigate new movements

Oct 17, 2004 02:00 AM

by Becky Branford

A year after mass protests and blockades forced the overthrow of their president, Bolivians are on the move again. Demonstrators have set out on foot towards La Paz -- Bolivia's administrative capital -- from towns and villages. They plan to converge on the city, for a mass rally -- a year and a day after Gonzalo Sanchez de Lozada was ousted.
About 80 people died in the clashes, and one demand of demonstrators is that Mr Sanchez de Lozada go on trial for the deaths -- a demand backed by Congress. But the issue burning at the heart of the protests is the same as it was in 2003: the fate of Bolivia's large reserves of natural gas, discovered over the past decade.

Historical memory
In the centuries since Spanish conquest, ordinary Bolivians have seen little benefit from their country's natural wealth. Now, they say, there must be change.
"Gas is our last natural resource," says Eusebio Melo, an elected community leader from El Alto, a poor city on the mountain plateau above La Paz which was the focus of many of last year's protests. The mines at Potosi have become for Bolivians a symbol of their country's ransacking by colonial powers.

How history still resonates in the mines
"That's why we mobilise so much. We want it to be used to industrialise Bolivia, to create jobs here, but President Sanchez de Lozada wanted to hand the industry over to foreign companies and to export the gas through Chile.”
"We know that if that happens, it'll be just as in the past, with our silver, tin, rubber. It'll leave the country and we'll get very little benefit from it," Mr Melo told.
Mass protests spelled the end for the president. But this time, protest leaders say they are merely flexing their muscles. The man who succeeded Mr Sanchez de Lozada was his own deputy, Carlos Mesa. But Mr Mesa has been forced to listen to the demands of indigenous and peasant Bolivians across the nation, and for the moment their leaders say they are prepared to wait to see the results.

Gas bill
The old law governing the exploration and exploitation of Bolivian gas -- drawn up by Mr Sanchez de Lozada -- is being replaced with a new bill currently being debated in Congress. The bill would see the creation of a new national company to oversee gas exploitation. The royalties paid on the gas by multinational companies would increase from 18 % to about 50 %, with the income spent on health, education, roads and jobs. It won broad approval from the population in a July referendum.
With local elections in December, and a new respect in parliament for the power of the protesters, commentators say an even more radical version of the bill may end up being approved.

Bolivia's natural gas
Volume: 1,529 bn cm (54 tcf) of proven and probable gas reserves
Theoretical value: $ 70 bn
Second largest reserves in Latin America (after Venezuela)
Bolivian GDP in 2003: $ 8 bn ($ 890 per capita)

There are calls from some Bolivians to nationalise the entire industry and to use the gas simply to provide poverty-stricken Bolivians with cheaper fuel. Predictably perhaps, the oil companies -- which have invested $ 3.5 bn in the gas fields since 1997 -- have been left fuming by the amendments.
"It is the same as if you rent a house," Raul Kieffer, president of the Bolivian Hydrocarbons Chamber, told. His chamber represents the companies drilling in Bolivia, including Spain's Repsol-YPF, Brazil's Petrobras and Britain's BP and BG Group.
"You sign a contract for so many years. The owner cannot come before time and say: 'Get out.' You say: 'I have a contract. If you want me to leave, you pay some money. Otherwise, I will sue.'" Industry watchers warn that the threat is not an idle one -- and that, if they did sue for breach of contract, the companies could be in line to receive some $ 5 bn in compensation -- a huge sum for the impoverished nation.

”Right to make money”
Alvaro Rios, the country's former energy minister, says President Mesa must tread a fine line if he is both to satisfy social demands and persuade the oil companies not to pull out. He agrees the current contracts are too generous to the oil companies, but argues that Bolivia needs the investment and expertise of the oil companies. The adjustments to the energy law, he says, are going too far.
"With the new royalties and taxes, they may well snap. Then there will be no investment and we will have lawsuits." The companies, he points out, "made some investment and found some gas -- and they have the right to make some money here". Others warn the failure to negotiate a settlement acceptable to the oil companies may scare other international investors from putting their money into Bolivia for years to come.

Protest leader in Cochabamba city
But the leaders of the newly confident social movements are dismissive of such arguments. Oscar Olivera led protests four years ago in the city of Cochabamba that threw out the private consortium of companies running the city'swater system. Today he is an active campaigner in the movement to nationalise the gas sector.
"We are mobilising all the social sectors to get Congress to approve the kind of law we want. We will hold a vigil around Congress day and night to back our demands."

He told the oil companies' threat to pull out of Bolivia, and to sue for breach of contract, is an empty one.
"We mustn't be intimidated. During the water struggle here in Cochabamba they warned us of all kind of dire consequences if we took on the foreign water companies. But it hasn't happened. Four years later the sky hasn't fallen in! We've still got water."
Bolivia's future is one of uncertainty. But for now, its bullish popular movements seem to have the upper hand.

Source: BBC News Online
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