Peter Howard Wertheim
OGJ Correspondent
RIO DE JANEIRO, Jan. 30 -- Juan Carlos Ortiz, head of Bolivia's state-owned Yacimientos Petroliferos Fiscales Bolivianos (YPFB), has resigned over disagreements with the government.
Ortiz said he is resigning because of differences with the government of President Evo Morales over its oil and gas nationalization policies.
Ortiz is the second head of the company to resign since Morales nationalized Bolivia's gas industry on May 1, 2006 (OGJ Online, May 2, 2006).
The country has the second-largest natural gas reserves in South America after Venezuela.
Ortiz previously worked for foreign energy companies, including Brazil's state-owned Petroleo Brasileiro SA (Petrobras), the biggest investor in Bolivia's gas and oil industry, analysts said.
Price rise
It is thought that Ortiz was given the task of smoothing relations with the country's largest gas customer, Brazil, which imports 26 million cu m/day of gas from Bolivia via the 3,150-km Bolivia-Brazil gas pipeline. Morales wants to increase the cost of gas to $5/MMbtu from $4.
Petrobras officials, speaking under the condition of anonymity, told OGJ that Ortiz was trying to convince Morales to limit the price increase of gas exported to Brazil to $4.50/MMbtu.
Last year Bolivia negotiated a price hike to $5/MMbtu for the 5 million cu m/day of gas it exports to Argentina. Meanwhile, it sells gas for $1.09 to a thermoelectric plant in Cuiaba, western Brazil, delivered via a 267-km pipeline in which Royal Dutch Shell PLC holds a 38% stake.
Morales omitted, however, that gas volumes supplies to the Cuiaba plant usually average little more than 1 million cu m/day.
Morales said recently said that Bolivia "can no longer continue subsidizing natural gas to Brazil."
Morales began nationalizing Bolivia's energy industry in May 2006 after winning an election campaign pledging to increase state control of natural resources.
Ortiz's resignation comes after Morales suspended key parts of the role of YPFB in the state takeover of Bolivia's oil and gas resources in a move analysts said highlighted the company's lack of money and technical expertise.
The implementation of the energy nationalization has been delayed, while a cash-strapped YPFB struggles to assume control of the sector.
As part of the nationalization, Bolivia also hiked taxes to as much as 82% from 18% on some multinational companies and ordered YPFB to hold a majority stake in several foreign-owned refineries. The additional revenue is expected to breathe fresh financial life into YPFB.
