Peter Howard Wertheim
OGJ Correspondent
RIO DE JANEIRO, Sept. 14 -- Brazil's state-owned Petroleo Brasileiro SA (Petrobras) has issued a statement vehemently criticizing Bolivia's Sept. 13 decree that consolidates state ownership of hydrocarbons sold in Bolivia's internal market.
The measure reduces Petrobras's profit margins at two refineries and gives Bolivian state-owned energy firm Yacimientos Petroliferos Fiscales (YPFB) powers to set domestic fuel prices.
"The establishment by Bolivia of new conditions for oil and liquefied petroleum gas production, transportation, refining, storage, and marketing, which encompass all of the byproduct price chain stages, is unacceptable," Petrobras protested.
The Brazilian company, disagreeing with the measure from legal, operational, and financial viewpoints, said the decree renders its refining business in Bolivia completely unviable.
Petrobras complained that the refining margins established by Bolivia's hydrocarbons superintendence in May 2005 were already insufficient to cover Petrobras's costs and that its requests to review these margins have not resulted in any changes by Bolivia.
Petrobras contends it was able to keep Bolivia's domestic market supplied—despite financial losses—only because of "the favorable conjuncture of the international price for exported products (gasoline and reconstituted oil)."
In its communiqué, Petrobras claims it achieved average gains of only $14 million for an initial investment of $105 million, values that contradict Bolivia's accusation that Petrobras had "extraordinary profits."
The Brazilian company also stated that Bolivia's new decisions "placed in jeopardy" the normal maintenance of Petrobras's activities in Bolivia.
Petrobras officials at the Rio Oil & Gas Expo in Rio de Janeiro said Petrobras might seek redress from an international court regarding Bolivia's latest decision. Brazil is heavily dependent on Bolivian gas imports of some 26 million cu m/day.
Petrobras and Bolivia have been negotiating compensations for the nationalization of Petrobras's two Bolivian refineries. The countries also were negotiating the price of Bolivian gas imported by Brazil. Bolivia sought to raise the gas price after it nationalized oil and gas reserves May 1.
Sources close to Brazil's Mines and Energy Minister Silas Rondeau said the minister's planned Sept. 15 trip to Bolivia with other Brazilian government officials may be canceled.