President Evo Morales has instituted nationalization of Bolivia's natural gas resources, making good on earlier promises to increase state control over the country's natural resources. From a CTV.ca article:
Soldiers guarded natural gas fields and refineries after Bolivia's leftist president ordered the nationalization of the sector, threatening to evict foreign companies unless they give Bolivia control over production within six months.
President Evo Morales announcement Monday fulfils an election promise to increase state control over Bolivia's natural resources, which he says have been "looted'' by foreign companies.
The action, announced Monday, is the latest sign of a Latin American backlash against foreign companies profiting off the region's resource sector. As a wave of protectionism sweeps the globe, countries are beginning to strive for increasing control over "strategic assets" such as energy.
In order to solidify control over resources perceived as being increasingly scarce, some European countries are rewriting laws regarding ownership and control of power and energy sources. In the case of Bolivia and Venezuela, leftist national leaders have resorted to outright nationalization of resources and industry assets. As a Reuters article explains,
The government decree says "the state recovers ownership, possession and total and absolute control" of hydrocarbons.
This means the state will own and sell these resources, relegating foreign companies to operators. Previously, Bolivian law said the state no longer owned the gas once companies extracted it from underground.
The article also explains that the military and officials from state energy company YPFB have taken control of "dozens of installations, including gas fields, pipelines and refineries". In order to appease some of his indigenous voters and strengthen ties with Venezuela's Hugo Chavez, Morales may keep the ball rolling in this direction:
"This is just the start ... tomorrow or the day after it will be mining, then the forestry sector, and eventually all the natural resources for which our ancestors fought," Morales told a jubilant crowd in La Paz's main plaza.
Among the companies affected by Monday's action are Petrobras, Repsol YPF, Total, BP, Exxon Mobil and BG Group PLC. News of the nationalization decree came late Monday (On Yahoo! Finance, I see the first headlines were coming in at around 4:25 PM). Let's see how this news affects shares in some of the companies mentioned tomorrow.