Nacionalización De Hidrocarburos

onalización
NATIONALIZATIONS IN BOLIVIAN OIL & GAS INDUSTRY
…On the Verge of a New One?

I. Introduction.

Since its first appearance in the Bolivian legal system in the late XIX century until its complex present formulation, the oil and gas legislation has suffered many changes as a fundamental part of the economic life of the Republic. Originally, it was part of the mining laws,considered together with other non-metallic minerals, but further on progressively extended its significance to the highest economical and legal structures of the country, being now one of the most important activities contributing to national development.
The mining and hydrocarbons wealth of Bolivia and the development of the related industries have always been closely linked to the evolution ofpolitical ideas. Nationalistic movements as well as free market doctrines found in these natural resources the economical support to their governmental policies along history.
A fact that cannot be ignored in the study of most Latin American countries is that the dependency of their natural resources is a structural characteristic of their economies and cause of the underdevelopment of theireducational systems and lack of modern technology. As small and poor countries do not control the markets for their production of raw materials, fluctuation in prices of commodities always represent the highs and lows of financial resources directed to their economic development, thus marking an inequality that is very difficult – if not impossible - to overcome vis-à-vis industrialised countries. Thatinequality, lack of industrialisation and limitations to the right of land ownership is an inheritance of the Spanish colonial system that imposed a stratification of classes that still exists mainly in detriment of the rural areas and the native population. As a consequence, third world countries seem to be condemned to export natural resources and to import manufactured goods, thus maintaining saidunbalanced situation.
Policies to substitute imports have proven unsuccessful, and facing increasing popular reject due to generalised poverty and lack of employment, governments looked for credits in foreign markets to cover fiscal deficits, thus increasing the external debt. When foreign credit conditions became harder, and the International Monetary Fund (IMF), the World Bank and otherinternational financial institutions strengthened their rules, Latin American countries found themselves in the impossibility to repay their debts and incurred at least in partial default, with the unavoidable consequence of shortage of foreign capital flow and investment.
Nowadays, that the free-market doctrines and liberalisation of the economy principles are in vogue, and after a successful“Capitalization Process” conducted from 1994 to 1997 under the presidency of Mr. Gonzalo Sánchez de Lozada, Bolivia has enforced a programme based on the reform of the state, modernisation of the economy, creation of incentives to attract foreign investment, change of the social security system and establishment of new regulatory bodies.
However, as structural economic problems have not yet been solved,social unrest is rapidly growing due to high unemployment and endemic poverty. A weak government with no political support, but with record prices of oil and gas in the market, is trying to obtain a new Hydrocarbons Law approved in Congress, in order to increase taxes on hydrocarbons production to cover the innumerable social and regional demands and reduce the fiscal deficit as imposed by theinternational institutions.

In this complex scenario we want to review the history of nationalizations processes in the Bolivian oil and gas industry.
II. General legal principles.

From the legal point of view it is necessary to remark that according to Article 139º of the Bolivian Constitution in force, no concession or contract can transfer the right of property on hydrocarbons fields that...