BOLIVIA: The occupation of foreign-owned gas fields in Bolivia by troops sent by President Evo Morales shocked global financial markets yesterday and provoked a hostile response from energy companies and international economic bodies.
Mr Morales, who took office earlier this year, ordered the occupation with a decree to "retake absolute control of our natural resources".
Although the president, Bolivia's first indigenous leader, had always made clear his intentions when he was elected with 54 per cent of the vote last December, the peaceful arrival of troops on May Day still made a dramatic international statement.
Companies were told to turn production over to the state firm and given six months to comply. Mr Morales described the move as "a historic day" for Bolivia.
The European Commission made its unease known yesterday. "The commission took note with concern the decree . . . which nationalises the Bolivian industry," said spokesman Johannes Laitenberger. "We had hoped there would be a process of discussion and consultation before it adopted such measures."
"We're still analysing it," said Eric Watnik, of the US state department, yesterday. "We're concerned with its potential impact on Bolivia's economy, on private investment and existing contracts."
"It is a symbolic message of sovereignty," said Larry Birns of the Washington-based Council on Hemispheric Affairs. "The very fact that he sent troops in, he was heightening the sense of urgency and dash. He is reaffirming his commitment to the indigenous community. He has remained constant and he is fulfilling all of his pledges. This could be a manoeuvring position to raise taxes and royalties but it's a rather bold demand."
Mr Birns said president Morales was conscious of the fact that many previous Bolivian leaders had made promises to the indigenous population, only to renege on them when in office. "He doesn't have [ Venezuelan President Hugo] Chavez's purse to spend on infrastructure or a sophisticated state-owned oil company, so he has to get these resources from somewhere," he said.
Shares in BG, spun out of the former state-owned British Gas, were down in early trading on the London stock exchange. Spanish oil group Repsol YPF, the most exposed of the western oil majors in Bolivia, lost 3 per cent of its stock market value although other key firms such as BP and Total remained unscathed.
BP, which has interests in Bolivia through stakes in Pan-American Energy and Empresa Petrolera Chaco, also played down the impact of the nationalisation. "Pan-American and Chaco have expressed their willingness to work with the Bolivian government over the transition phase as the latest decree is implemented over the next six months," a BP spokesman said.
A leading London oil analyst, who asked not to be named, said both BP and BG were privately furious at the developments but felt powerless to stop them at this stage. "This is most serious for Repsol, which has around 18 per cent of its hydrocarbon reserves in Bolivia, but clearly oil companies are worried that governments from Bolivia to Russia are taking back oil and gas into state ownership," he said.