BOLIVIA: Gas Exports To Argentina’s Rescue

By Franz Chávez Reprint | | Print |

Franz Chávez

LA PAZ, Apr 20 2004 (IPS) - Natural gas will once again be pumped through an old pipeline that has been lying abandoned for 10 years, if civil society in Bolivia does not stand in the way of a plan to assist Argentina with emergency fuel exports.

Bolivian President Carlos Mesa is travelling to Buenos Aires Wednesday, where he is set to sign an agreement with President Néstor Kirchner to supply Argentina with four million cubic metres a day of natural gas to help ease that country’s severe energy crisis.

Through the new contract, Argentina will import Bolivian gas for six months, although the Kirchner administration would like the deal to be extended to 2006.

Argentina is facing a serious deficit in natural gas production that is causing shortages in domestic consumption and has forced the country to limit its exports to Chile.

Social and labour organisations like Bolivia’s central workers’ union (COB) have put up resistance to the agreement, partly due to the possibility that Buenos Aires could use the new imports of gas to live up to its commitments to Chile, which has been complaining loudly about Argentina’s failure to fulfill its export contracts.

Since it lost its Pacific coastline to Chile in the War of the Pacific (1879-1883), impoverished landlocked Bolivia has been hostile towards its neighbour.

Santiago and La Paz broke off diplomatic ties once again in 1978, after the failure of talks in which Bolivia was attempting to recover an outlet to the sea.

The nationalist sentiment was fanned in the month-long protests that toppled right-wing president Gonzalo Sánchez de Lozada in October.

Public opinion in Bolivia is now worried that gas exports will reach Chile through the pipeline that runs from the southern Bolivian region of Pocitos to the Campo Durán plant in northern Argentina.

Francesco Zaratti, the new delegate named by the president to review the privatisations that have been carried out in Bolivia, said he had confidence in Argentina’s ”good faith” pledge not to export the gas to Chile.

President Mesa, who replaced Sánchez de Lozada in October, emphatically stated that he would not sell ”a single molecule of gas to Chile.”

But it came as a surprise last week when Mesa announced that Bolivia would make emergency gas exports to Argentina. The news came in a speech delivered when the president’s new cabinet – which includes Xavier Nogales, the country’s third energy minister in six months – was sworn in.

To get around parliament, which has generally blocked his initiatives, the president issued a decree to call a Jul. 18 popular referendum on the conditions under which Bolivia’s gas will be exported, while criticising the country’s lawmakers for shelving the draft law on gas exports.

The design of Bolivia’s new energy policy will depend on public opinion’s views on the best way to exploit the country’s natural gas resources – as expressed through the referendum – and on external factors like Argentina’s energy crisis, analyst Carlos Villegas told IPS.

The decision to help Argentina will also address the demands of Bolivia’s southern gas-producing region, which is pressing for contracts to export gas, unlike the social organisations in the western part of the country, where La Paz is located, which want the gas to be processed in Bolivia, he pointed out.

With 54 trillion cubic feet of natural gas, Bolivia has the second-largest reserves in Latin America, after Venezuela.

Up to last week, the president’s proposed energy policy only had the backing of the Nationalist Revolutionary Movement (MNR), the party that was in power until October.

But when Mesa decided to push through his new natural gas strategy by means of presidential decrees instead of legislation, other sectors had a change of heart, and promised to debate the energy bill officially presented last Thursday.

However, the lawmakers of the leftist Movement To Socialism (MAS) say that before the agreement is signed with Buenos Aires, a new energy law should be passed that would de-privatise or reassert state control over the country’s natural gas reserves.

MAS also wants to force the foreign oil companies operating in Bolivia to increase the royalties and taxes they pay the state, and restore the right of YPFB, the state-owned oil company, to produce and sell fuel.

Mesa agrees with the initiative to strengthen YPFB, and proposes gradually increasing taxes and royalties from 18 to 50 percent of the gas pumped by transnational corporations.

Natural gas has been the flashpoint in Bolivian politics since democracy was restored 21 years ago.

It was an announcement that natural gas would be exported to the United States through a port in Chile that triggered the month-long uprising in the western part of the country last October in which more than 70 people were killed when the army was called out, according to human rights groups.

When Mesa, Sánchez de Lozada’s vice-president, succeeded the toppled president, he promised to hold a referendum on the conditions in which the country’s natural gas would be exported, including which port it would be pumped through, and to revise the country’s energy policy.

Since then, two energy ministers have resigned, leaving the bill on natural gas half-written, in a context in which the foreign oil companies do not want a change of rules and the government is attempting to ensure a larger share of gas profits for the state.

The first minister to resign, oil industry consultant Alvaro Ríos, reportedly did so under pressure from private companies and MAS’s threat to call him up for formal questioning in parliament.

His successor, Sánchez de Lozada’s former foreign minister Antonio Araníbar, quit after he was publicly rebuked for signing an apparently fraudulent contract between the state and the now bankrupt U.S. energy giant Enron.

Nogales, the influential new energy minister, announced last week that a port in Peru would be the best option for exporting gas to the United States, as long as Chile refuses to discuss Bolivia’s demand for an outlet to the sea.

”Gas is the country’s best foreign minister,” Nogales stated in the city of Tarija in southern Bolivia, the region that accounts for 85 percent of the country’s natural gas.

But while newspapers in Lima proclaimed that Peru had won the ”gas war”, Mesa hastily clarified that no decision had been reached.

Villegas said the government should be more cautious on the foreign policy front, and avoid making rash public statements on the choice of a port, without having previously negotiated the question with Lima.

Patillos in northern Chile – which is closer – or Ilo in southern Peru are the ports to which a pipeline could be laid. A liquefaction plant and port facilities that would have to be built require an investment of five billion dollars.

Government officials said a decision would be reached after Bolivians vote in the Jul. 18 referendum.