Bolivia nationalizes energy firm Chaco

Bolivia's government seized control of energy producer Chaco from Pan American Energy, President Evo Morales said, two days before the country votes on his proposed constitution.
"With this decree today, we nationalize all the shares of oil company Chaco. (They belong) to Bolivians now," Morales said during a speech given in one of Chaco's natural gas fields located in the central Cochabamba region.

Morales ordered Pan American Energy last year to transfer part of its 51 % stake in Chaco to the Bolivian government so that state-run energy company YPFB, which at the time held a 49 % stake, could become majority holder. But talks over the transfer of shares had broken down, prompting the government to take control of the whole company.
Pan American Energy is controlled by oil giant BP.

Bolivians will vote on a new constitution championed by Morales but criticized by opponents who say the charter would give the leader too much power.
"We are aware of President Morales' decree nationalizing the shares of Chaco but have no comment on the decree," said a BP spokesman in London. "We support Pan American in their discussions with the Bolivian authorities."
Meanwhile, Pan American Energy said that the company will defend its interests "in all available forums", which could include filing for international arbitration.

Last year Morales seized control of pipeline company Transredes, previously controlled by Ashmore Energy International. Morales nationalized Bolivia's energy industry in 2006, forcing foreign energy companies, including Brazil's Petrobras, Spain's Repsol and France's Total to pay more taxes.
Chaco is the fourth largest natural gas company in Bolivia in terms of reserves, controlling 4.9 % of the Andean country's natural gas deposits, according to a 2005 audit.

Petrobras, Repsol and Total control nearly 84 % of the country's proven and probable natural gas reserves, which were measured at 48.8 tcf in 2005, the second-largest deposits of the fossil fuel in South America. Chaco controls some 20 fields, of which 10 are currently producing hydrocarbons.
Bolivia is the region's top exporter of natural gas, shipping gas to its neighbours Brazil and Argentina.