By Humberto Márquez
CARACAS, May 16 2006 (IPS)

A perusal of the history of the nationalisation of energy resources in Latin America shows that Venezuela’s process three decades ago involved lengthy negotiations with the foreign companies involved – in stark contrast to Bolivia’s recent surprise occupations of natural gas fields, refineries and petrol stations.

And before this, Mexico had nationalised its own oil industry in a historic move famed in equal measure for its pioneering strategy and the reactions of companies it affected.

The Bolivians themselves had already tried – and failed û twice, in 1937 and 1969.

On May 1, Bolivian President Evo Morales ordered the occupation of gas fields operated by Brazil’s state-run oil company Petrobras, the Spanish-Argentine Repsol YPF company and France’s Total, in a move that even caught many of the president’s ministers off guard.

Mexico’s then-president Lázaro Cárdenas (1934-1940) also surprised U.S. and European companies, which had refused to address union demands, with his nationalisation pronouncement at 10 p.m. on Mar. 18, 1938.

In contrast, on the morning of Jan. 1, 1976, Venezuelan President Carlos Andrés Pérez (1974-1979 and 1989-1993) raised his country’s flag above the Zumaque 1 oil well, where large-scale exploitation had begun in 1914, culminating a process noted for the generally calm reactions of all stakeholders.

Two small private Venezuelan firms – Mito Juan and Las Mercedes – were nationalised, or rather, expropriated by the state, along with the affiliates of U.S. giants such as Standard Oil (later Exxon), Gulf, Amoco, Mobil, and the British-Dutch Shell.

The nationalisation of the oil industry vindicated the efforts that trade unions, Venezuela’s political left, and the defenders of the primacy of the State had been making since 1935, when the 27-year dictatorship of Juan Vicente Gómez came to an end.

Former president Rómulo Betancourt (1945 and 1959-1964), the great social democrat leader of the 20th century, wrote in his book Venezuela, Oil and Politics that when Gómez was supposed to draw up legislation on the question, he called the representatives of the multinationals and told them: “You know about oil. You make the laws. We’re just beginners.”

The dictator Marcos Pérez Jiménez (1948-1958) awarded new concessions to the oil companies, but after he was overthrown, Betancourt’s Democratic Action party swung towards nationalism, creating a small state-owned oil company and spearheading the 1960 foundation of the Organisation of Petroleum Exporting Countries (OPEC).

In 1971, centre-right President Rafael Caldera (1969-1973 and 1994-1999) nationalised the then modest natural-gas industry, and in 1973 a law was passed that ordered the early return to the State of oil concessions that were abandoned, underused or causing major environmental damage.

The foreign oil companies pulled back on investments during these years, convinced that Venezuela would join the nationalisation trend set by Indonesia (1965), Algeria (1971), Libya and Iraq (1973).

When the Arab oil embargo of 1973 drove up oil prices threefold, the Venezuelan State geared up to nationalise its iron and petroleum industries, and after taking office as president in 1974, the social democrat Pérez created a multi-party commission to study the issue.

While the shape that the nationalisation process would take was being discussed and the law was being drafted, negotiations were initiated with the oil companies, resulting in a relatively peaceful transition, marked only by two hotly contested points.

First, whether the companies should or should not be compensated û a debate now in full force in Bolivia. The multinationals, backed by their governments, demanded compensation, while radical Venezuelan groups focused on demonstrating that the corporations had recuperated their investment many times over.

Domingo Maza, who has taught several generations of Venezuelan economists, said the damage wrought by gas that companies had burned and released into the atmosphere for decades at the oil field in the Lake Maracaibo basin in northwestern Venezuela outstripped the five billion dollars claimed in compensation.

In the end, an agreement was reached and the companies were paid 4.3 billion dollars for their assets: 20 percent in cash and the rest in bonds.

In Mexico, citizens held public rallies to raise the money to compensate the companies, even accepting chickens as donations.

In contrast, Bolivia’s Morales first occupied the gas fields, and then gave the foreign oil companies six months to renegotiate the terms of their contracts; he assured them that they would recuperate their investment, but stated that La Paz would not pay any compensation.

The second controversy in the Venezuelan process stemmed from Article Five in the law, which left a loophole for the return of multinationals under certain circumstances, while prohibiting majority private participation. The companies eventually returned in the 1990s.

Under new legislation, current Venezuelan President Hugo Chávez has forced some 30 companies to eliminate operating service contracts, which have been converted to joint ventures in which PDVSA holds at least a 60 percent stake.

Morales has also said that he wants “partners, not bosses” in the energy industry, which he once again put under the control of the state-owned oil company Yacimientos Petrolíferos Fiscales de Bolivia (YPFB).

Mexico’s oil industry, meanwhile, is still a state monopoly.

Venezuela created a company with a different name to take control of the 13 private corporations that changed hands at midnight on Dec. 31, 1975, before it merged them into three PDVSA subsidiaries. Since the 1990s, PDVSA is a single company with branches for its diverse operations.

In terms of immediate consequences, the differences are significant. In 1938, Britain broke off relations with Mexico, and the United States and the Netherlands declared a commercial boycott against the Cárdenas government.

As Japan and Germany remained major purchasers of Mexican oil, the escalation of World War II brought about a shift in U.S. and British opinion, and the embargo was lifted in 1941.

During the early months of 1976, some U.S. refineries cut down on purchases from Venezuela, but later restabilised import levels. For many years, multinationals also enjoyed technological assistance and favourable oil sales-purchase agreements.

In Bolivia, meanwhile, Morales’ sudden move surprised and upset Petrobras, Repsol, Total and the Argentine and Brazilian governments. However, the presidents of these three countries have agreed to negotiate win-win agreements for producer and purchasers.

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