Bolivia wants oil and gas overhaul enacted in 2005

Dec 23, 2004 01:00 AM

Bolivia's president said that the Andean nation has big challenges facing it next year, among them passage of controversial new legislation overhauling how its natural gas, by far its most important resource, is exploited. President Carlos Mesa outlined his goals for next year in a chat with political correspondents.
"If Bolivia manages to end 2005 having resolved challenges such as approving its hydrocarbons law and convening and electing its constituent assembly, we can reach Dec. 31 and say proudly that that year was worth the trouble," he told.

The bill mandating big changes to the oil and gas sector is now wending its way through Congress and the assembly Mesa spoke of is expected to be convened by mid-2005 for the purpose of drafting a new constitution.
Without trying to downplay Bolivia's serious economic problems, Mesa adopted an optimistic tone and reminisced with the reporters about his own experience interviewing politicians as a television news anchor.

Mesa, a respected journalist, media executive and historian, entered public life as the vice president of Gonzalo Sanchez de Lozada, who was forced to resign the presidency in October 2003 by sometimes violent protests against his plan to export natural gas to North America via a port in Peru or Chile.
Seeking the trust of the labour, Indian and grassroots groups that unseated his predecessor, President Mesa quickly promised to re-establish a degree of state control over the nation's oil and gas resources and to convene a constitutional convention aimed at making the government more responsive to Bolivia's largely Indian populace.

In November, Bolivia's lower house of Congress approved legislation providing for the unilateral modification of existing contracts with oil and gas companies, a move the companies decry as virtual nationalization. The Senate has yet to consider the measure.
As it stands, the legislation applies mandatory changes to the 76 contracts signed with oil and gas firms since 1997. The bill provides for extracted oil and gas to be sold to the government at a price to be set principally by the state. Under current legislation and the companies' contracts, they sell the extracted products as they see fit.

If approved by the Senate, Mesa, who has expressed reservations about the bill, has the option of signing it into law, vetoing it or sending it back to the legislature with amendments. The government has argued that passage of the law as it now stands will result in a string of breach-of-contract lawsuits against Bolivia.
The Chamber of Industry and Commerce, based in the gas-rich eastern province of Santa Cruz, denounced the lower house's decision, with chamber director Oscar Ortiz saying that the measure "greatly complicates" Bolivia's position in the international community.
The bill has also met with staunch opposition from civic groups in the provinces of Santa Cruz and Tarija -- both home to gas and oil fields.

Source: EFE via COMTEX
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