Who loses from the latest twist in Bolivia’s relationship with foreign oil companies? Evo Morales marked the 100th day of his presidency by sending in troops to seize foreign-operated energy assets.
Details of exactly what will happen to these remain sketchy, but Repsol of Spain is an obvious potential loser. At least January’s reserves writedown had already lowered expectations. Yesterday’s 0.6 per cent fall in the share price reflects that, as well as the fact that any losses would be concentrated in low-margin, long-dated gas supply.
For BG Group, Bolivia may represent only 3-4 per cent of current production and proved reserves, but it is potentially a significant element of the UK company’s medium-term production growth prospects. That said, exactly how and when these reserves were to be developed was uncertain anyway. In fact, the shares rose yesterday, on the back of a new agreement to enter Oman.
The sheer scale of Petrobras, Total and BP minimises the impact on them. For the sector as a whole, though, this is another instance of governments taking a larger share of the pie while energy prices are high. That could actually provide a short-term boost for oil companies such as OMV and Statoil, with their focus on “safe” European operations.
The biggest loser, therefore, is Bolivia itself. Foreign capital and expertise has underpinned the seven-fold increase in the country’s gas reserves since 1997. Neither Venezuela since the 2002-03 strikes and mass dismissals, nor Iran since its 1979 revolution, have regained pre-disruption production levels. Mr Morales may have one eye on the oil price and the other on popular support. Both are short-term, volatile factors. In oil, it is better to play the long game.
