MADRID, Spain – Spain will send a delegation to Bolivia for discussions following the Latin American country's move to nationalize its oil and gas resources, a government official said Wednesday.
Foreign Minister Miguel Angel Moratinos agreed to send the "political and technical" team during a telephone conversation with Bolivian President Evo Morales early Wednesday, aide Bernadino Leon told the Cadena SER radio.
Morales' nationalization plan seriously affects foreign companies, such as Spanish-Argentine energy company Repsol, which along with Brazil's Petrobras, is Bolivia's biggest foreign investor, having invested more than $1.2 billion since 1997.
"What we know does not augur well," said Leon. "But we hope that the process will allow companies to stay in Bolivia in a reasonable manner."
He said the delegation would travel to Bolivia in the next few days.
Morales chose Labor Day, May 1, to order companies to sign new operating contracts within 180 days or leave Bolivia. He ordered the military to take control of 56 exploration and production fields, as well as two refineries owned by Petrobras.
Leon said Spain would "act firmly and prudently" but added the "ball was now in Bolivia's court."
Prime Minister Jose Luis Rodriguez Zapatero said the nationalization posed a bilateral problem but stressed it would not affect Spanish aid to Bolivia.
"The Bolivian people will always have Spain at its side regardless of individual problems," the SER radio cited Zapatero as saying.
He said Spain intended to apply "much political and diplomatic effort" to resolving the matter.
Bolivia is demanding foreign companies turn over most production control to its cash-strapped state-owned oil company, Yacimientos Petroliferos Fiscales Bolivianos. Foreign companies also were told that their production would be turned over to YPFB for sale and industrialization, affecting mostly Repsol and Petrobras.
Morales claims Bolivia's natural resources have been "looted" by foreign companies. He said he intends extending the measures to cover mining and forestry.
Repsol earlier called the news "worrisome," but said the company was waiting for more details.
"Bolivia should not be marginalized from the international political system," Repsol Chairman Antonio Brufau said from Argentina.
"Given the present situation, it is imperative that we study the decree, analyze its consequences in detail and make the most of the 180-day period, established by the government, to reach agreements that are economically rational for both parties," Repsol cited Brufau as saying.
"There's still time and I hope that in the these 180 days we are all capable of using our intelligence and talent," he added.
The Foreign Ministry on Tuesday said it called in Bolivia's business attache to officially express "deep concern about the measure and the possible consequences for bilateral relations."
Industry Minister Jose Montilla, who is to meet with representatives of the affected Spanish companies at the end of this week, said the nationalization was contrary to Bolivia's interests and was likely to deter foreign investment in the poorest country in South America.
Repsol started exporting Bolivian gas to Argentina last year.
About 18 percent of the Spanish-Argentine company's booked proven reserves and 11 percent of its production comes from Bolivia, the company said. Less than 2.5 percent of Repsol's net profit in 2005 came from Bolivia, although the company holds about a third of the country's reserves.
Shares in Repsol were down 1.1 percent at $29.42 in Madrid trading.
Other European companies active in Bolivia include BP PLC, BG Group PLC and Total.
BG Group PLC said Wednesday it was reviewing the decree and would engage in talks with the Bolivian government in the coming months.
Chief Executive Frank Chapman said a decision to continue to invest in Bolivia or not "is only about value" and not ownership structure. "If returns are inadequate," the company will stop investing in Bolivia, he added.
Chapman said that BG's assets in Bolivia "are not material," representing less than 2 percent of the group's capital employed and less than 4 percent of its proved reserves.