Nationalization trend troubles experts

WASHINGTON — First Russia. Then Venezuela. Now Bolivia.

Soaring energy prices are fueling a global wave of natural-resource nationalization that is souring the investment landscape for international oil companies and reshaping energy politics.

While it is anyone's guess as to which energy-rich developing nation will be next to assert greater state control over its oil or natural-gas assets, analysts say it is only a matter of time before the actions of Russia's Vladimir Putin, Venezuela's Hugo Chávez and Bolivia's Evo Morales inspire a copycat.

"If you're an international oil company and see this trend, it must be worrying," said Yasser Elguindi, senior managing director at Medley Global Advisors in New York.

It should also be worrisome to energy consumers when global supplies are already extremely tight, analysts said. They noted that non-OPEC oil production has not lived up to its potential since 2003, when Chávez began tightening his grip on Petróleos de Venezuela and, before that, Putin jailed the former chief of Yukos, paving the way for its prized assets to be acquired by state-owned Rosneft.

As a result, world oil markets were even more vulnerable to supply disruptions stemming from violence in Nigeria, war in Iraq and hurricanes in the Gulf of Mexico. On Tuesday, crude futures shot up to almost $75 a barrel as traders fretted about the possible outcome from escalating tensions between the West and oil-rich Iran over its nuclear development.

Bolivia's government said Tuesday it also would extend control over mining, forestry and other sectors of the economy. In Peru, Ollanta Humala, the nationalist presidential hopeful headed to a runoff election, has said he, too, would force foreign mining and gas companies to renegotiate contracts. But his vice-presidential running mate, Gonzalo Garcia, said Tuesday that Humala would take a less confrontational stance than Morales.

Bolivia's decision Monday to threaten seizure of natural-gas fields from companies that refuse to renegotiate production contracts will have little impact on energy supplies, but its symbolic significance illustrates the rising influence of national oil companies and the increasing difficulty private companies face as the world's energy hunting grounds become less hospitable.

Ecuador is arguing with the United States over a new oil-royalties law. Last week, the World Bank tentatively resolved a financial dispute with Chad, which had threatened to shut off an oil pipeline.

The rebels threatening Nigeria's oil infrastructure have gained clout because of high oil prices, and analysts said they would not be surprised to see Angola try to renegotiate some contracts with foreign oil companies.

"When you start polling the world for where major oil companies can do business, you have West Africa, Russia, the Middle East and Latin America. What they all share is that they're becoming more and more difficult operating environments," said A.G. Edwards oil analyst Bruce Lanni.

Elguindi said major oil companies, such as Exxon Mobil and Royal Dutch Shell, have begun shifting their businesses in response to nationalization.

"If you gave oil companies a choice between the tar sands in Canada or oil in Saudi Arabia, which do you think they'd choose?" Elguindi said.

Some analysts said that energy-rich nations clearly have the upper hand now — in contrast with the late 1990s, when oil traded at about $11 a barrel — and that it will be up to individual companies to decide if they can live with less control over their foreign operations while getting less revenue per barrel.

For example, Exxon Mobil chose to sell its stake in a Venezuelan oil field rather than accept less desirable financial terms.

For its part, the Bush administration said it was worried about U.S. corporate interests being trampled upon abroad, though it stopped short of any direct criticism of the Bolivian government.

"When the issue of privatization does come up, or renegotiating contracts, certainly our concern is that any government meet or fulfill its contractual obligations," State Department spokesman Sean McCormack said. But McCormack would not say whether any contracts had been violated because "we don't have a complete picture of the situation."

Morales was elected late last year on a populist platform, promising to return to the country natural resources that had been "looted" by foreign companies. Bolivia has South America's second-largest natural-gas reserves after Venezuela and is a critical supplier to Brazil and Argentina.

With this move, he risks alienating natural and otherwise sympathetic partners, such as Brazil and Spain, said Michael Shifter, a Latin American analyst at the Inter-American Dialogue think tank in Washington. "Ordering the military to seize the natural-gas fields is unnecessarily confrontational and antagonistic."

President Luiz Inácio Lula da Silva of Brazil held an emergency Cabinet meeting to assess the impact on his nation, the biggest buyer of Bolivian gas and the owner of Petróleo Brasileiro, one of Bolivia's biggest gas producers.

Spain's Foreign Ministry summoned Bolivia's business attaché to express "deep concern about the measure and the possible consequences for bilateral relations."