Bolivia to renegotiate gas deals with Argentina and Brazil

Bolivia's new leftist government expects to set new natural gas prices with two key clients, Brazil and Argentina, and hopes to re-negotiate its contracts with the multinational companies who produce the gas in the next six months, according to top government energy officials.
Recently inaugurated President Evo Morales has pledged to harness more profit from Bolivia's natural gas reserves, which are South America's second largest after Venezuela.

Jorge Alvarado, president of Bolivia's state petroleum company Yacimientos Petroleros Fiscales de Bolivia, has taken charge of setting new gas prices with Bolivia's two neighbours who buy the gas at between $ 3.18 and $ 3.25 per 1,000 cf. Current trading prices in the US are almost triple that, according to the US Department of Energy.
Morales' wants to re-establish the state petroleum company, which was privatized in the 1990s, and wrest control of national gas production from the multinational companies that currently have control. It's estimated the government will need at least $ 600 mm to do so, but there is no clear source for the money.

The biggest holders of Bolivia's proven and potential reserves include a Brazil's state-owned Petroleo Brasileiro; the UK's BG Group and BP; France's Total; the Spanish-Argentine Repsol-YPF and US-based ExxonMobil. Morales named free-market critic Andres Soliz as the minister of hydrocarbons, which signals the government will be a potentially tough negotiating partner for the companies.
Alvarado said that he expects to wrap up contract negotiations with the foreign companies within six months. A Bolivian law enacted last year raised oil and gas production taxes and royalties to 50 %, and at least on paper makes the state the sole owner of production.