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BOLIVIA: Oil Companies Not Entitled to Payment, Bolivian Says

by Carter DoughertyThe New York Times
May 12th, 2006

May 12, 2006
Oil Companies Not Entitled to Payment, Bolivian Says

The leader of Bolivia on Thursday ruled out compensating oil companies for nationalized oil and gas fields as he came under questioning from European officials at the start of a high-level meeting on energy and trade.

President Evo Morales said there was no need to pay companies like British Gas, Total of France, Repsol of Spain and Petrobras of Brazil because they had already recovered their investments and had earned a significant profit from the fields. Mr. Morales declared a nationalization of the oil and gas fields on May 1, backed by Bolivian army troops.

The European Union wants closer economic ties with Latin America, and its commissioner for foreign relations, Benita Ferrero-Waldner, said the Continent was looking for discussions with Bolivia and the affected companies. "If there are already contracts, these have to be tackled and changed by dialogue," Ms. Ferrero-Waldner said.

But Mr. Morales was firm. "There is no reason to indemnify them whatsoever," he said at a news conference at the beginning of the meeting of dozens of European, Latin American and Caribbean leaders. "If we were to expropriate their technology or their assets, in that case there could be talk of indemnifying them, but that is not the case."

Mr. Morales added that there was "no reason for us to ask, no reason for us to consult, and there is no reason for us to discuss the policies of a sovereign nation."

He also confirmed expectations that his government planned to seize farmland and redistribute it to peasants, a prospect that has unnerved neighboring Brazil, whose oil giant, Petrobras, was affected by the gas field nationalization and whose farmers hold land in Bolivia.

"We're not going to limit ourselves to oil resources," Mr. Morales said. "We're also going to finish with huge landowners," on especially productive land, "in our country."

The Bolivian energy nationalizations are to be followed by a six-month phase in which the government renegotiates energy contracts.

Although Mr. Morales said on Thursday that no compensation would be paid because there was no confiscation of energy companies' assets, Bolivian officials have said that if the new contract talks fail, expropriations are possible, and in that case, restitution would be made.

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