Tuesday, November 30, 2010

The State Department Cables - Evo is Difficult Says Christina

Revelations about US-Bolivian relations from the infamous State Department Cables

Christina and Nestor Kirchner had good relations with Thomas Shannon Undersecretary of State during the Bush administration.  acting as a secret go-between for the US Government with Evo.

Colaboración en Bolivia
Los telegramas intercambiados entre la Embajada en Buenos Aires y la Secretaría de Estado muestran las buenas relaciones que llegaron a mantener Néstor Kirchner y la presidenta con la Administración de George Bush y su secretario de Estado adjunto para Asuntos de América, Thomas Shannon, y la difícil comunicación que existió, al menos hasta marzo-abril de este año, con la Administración de Obama y, sobre todo, con Arturo Valenzuela.
La confianza con Shannon llegó hasta el punto de que la presidenta aceptó "cooperar con el Gobierno de Estados Unidos en Bolivia". "CFK afirma que Argentina cooperará con el USG [Gobierno de Estados Unidos] en Bolivia, pero que tenemos que ser cuidadosos para que no parezca que existe una 'operación política' contra el Gobierno, dadas las sospechas de Evo", asegura el telegrama norteamericano. Shannon ya había dado seguridades a la presidenta argentina de que Estados Unidos garantizaba la integridad territorial de Bolivia e intentaba, con muy poco éxito, convencer a Evo Morales de que Washington no tenía nada contra él. "Evo no es una persona fácil, nos confía CFK, haciéndonos notar que Argentina tiene problemas para conseguir que Bolivia le abastezca de gas natural. Todos necesitamos paciencia, nos dijo", relata el entonces embajador Wayne. Poco antes, un telegrama informa de las gestiones que ha hecho el ministro de Exteriores argentino, a solicitud del embajador de Estados Unidos, para bajar la tensión en Bolivia respecto a Washington y garantizar la seguridad de su Embajada en La Paz. "Taiana nos informa de que ha llamado tres veces al viceministro boliviano para insistir en esos dos puntos".
Un despacho enviado por la Embajada en Buenos Aires antes de la visita de Shannon en agosto de 2008 expone claramente cuáles son las demandas de Estados Unidos al Gobierno argentino: "Esperamos que Argentina desempeñe un papel positivo en evitar un conflicto y llevar a buen puerto la democracia en Bolivia; que influya en el presidente ecuatoriano, Rafael Correa, para que se comporte con más moderación; que tome una posición más constructiva, madura y equilibrada en el conflicto colombiano y que influya positivamente en su contraparte venezolana".

 So much for Evo being threatened by the US:

* Shannon asked the Kirchners to reassure Evo that the US guaranteed Bolivia's territorial integrity (this was during the time that Evo was accusing the US of supporting the regional opposition in Santa Cruz which he claimed wanted to split the country)

* Shannon asked the Kirchners to try to convince Evo that the "US didn't have anything against him". trying to lower tensions
* The American Embassador in Buenos Aires asked Argentinian Foreign Minister Taina to intercede with Bolivian authorities to  "lower the tension in Bolivia" vis a vis the U.S. and to guarantee the "safety" of the American Embassy in La Paz. (This coming after mobs of Evo-supporters - with at least some officialist connivance- attacked the U.S. Embassy and nearly set it ablaze). 
* Christina Kirchner describes Evo as "not an easy person"

What emerges at least from this series of cables is a State Department from the past couple of years actually using diplomacy to deal with and get along with a rather prickly ideologue like Evo.    Far cry from trying to destabilize him as he claims.

The Kirchners also come across as having much better relations in private with the Bush Administration than they let on in public.

Sunday, November 07, 2010

Bolivias Shrinking Gas Reserves - The Price of Evo's Nationalization Part 1


Bolivia's government has finally confirmed what Bolivian analyst Hugo Del Granado reported a month ago,  tthat the country's natural gas reserves have dropped precipituously.

From Merco Press

According to a recent audit commissioned by the Bolivian government and conducted by US-based consulting firm Ryder Scott allegedly shows that the country has only 8.3 trillion cubic feet of proven gas reserves, sharply lower than the range of 12.8 trillion to 26.7 trillion that has appeared in contradictory official versions.
“It's a blow to the expectations that have been built up since the start of the decade concerning ... (factors) that gave Bolivia an economic advantage in the regional context,” energy sector analyst Hugo del Granado is quoted in La Paz press.

Del Granado caused a stir days ago when he published an article about a preliminary yet reliable report he had seen concerning a sharp drop in proven gas reserves, noting the government has been keeping the information secret since June.
Apparently the recent audit commissioned by the government and conducted by U.S.-based consulting firm Ryder Scott shows that Bolivia has only 8.3 trillion cubic feet of proven gas reserves, sharply lower than the range of 12.8 trillion to 26.7 trillion that has appeared in contradictory official versions.
Bolivia is “resisting the truth” because acknowledging the reality would mean losing its status as the second-leading natural gas power in South America, Del Granado said, adding that the country currently ranks fourth in the region in terms of proven reserves.
Venezuela has 200 trillion cubic feet of gas reserves, followed by Argentina, with 13.2 trillion; Brazil, 12.7 trillion; Peru, 11.2 trillion cubic feet; and Colombia, 4.4 trillion, according to figures cited by the expert.
Bolivia's former superintendent of oil and gas, Carlos Miranda, told the media that, if the drop in reserves is officially confirmed, Bolivia would be faced with “the nation's biggest-ever natural resources disaster.”

 Its A Gas --

Bolivian law requires an annual certification of its proved natural gas and oil reserves for the previous year ending December 31st, by an independent certification firm.   Proved reserves of natural gas are "estimated on the basis of geological and engineering data that make it possible to determine with reasonable certainty if the oil and gas found in known fields could be recovered in current economic and operating conditions", to use the widely accepted SEC definition.    In order to perform the certification,  certifiying company would send personnel to the country, go on-site to the gas fields and headquarters of everyone involved in oil and gas, and pore over seismic, production and financial data and present a certification report.

But Who's Counting?
 Carlos Villegas - President of YPFB, very recently Morales' Hyrocarbons Minister, a main architect of Evo's nationalization strategy, finally admitted that the gas reserves were at 12.8 Trillion Cubic Feet, after months of dodging the question of what the results of the 2009 certification were. 

Amazingly enough during his tenure running the nationalized hydrocarbons sector there has been no certifcation of reserves.  Ironically, the same "neo-liberal" governments Villegas made a career out of vilifying complied with this certification rather scrupulously.
 Bolivia previously used,  De Goyler & MacNaughton,  until 2006 when  Evo's government fired them.  Using a new methodology D & M had given a report lowering reserve estimates in some of Bolivia's major gas fields from 22,48 TCF in 2004 to 12,86 TCF for 2005 - leaving around 15TCF total.    Evo's government was angered with this report, saying it was "politically motivated" to harm Bolivia's nationalization process.   This argument is being used again, but without mentioning that Bolivia's largest gas producer Petrobras (and the multi-national that would be behind any of  D&M's dastardaly "plots") was vociferously against this report.    And alienating a State company like YFPB would not seem in character for a company whose client list includes many large State Oil Companies of countries with prickly rulers like Libya and Russia.  That also brings up the point that if the 2005 report if accurate could mean that D&M over-estimated gas reserves in the preceding 8 years to inflate corporate filings.   Then again, part of that downward estimate could have involved  the change in hydrocarbon laws and taxation regime in 2004 and 2005, that made recovering a certain percentage of that gas economically inviable and/or resulted in lower spending on exploration, maintenance, and drilling which would also affect the numbers down.   Problem with all of this is that the report and certification was not accepted by the government, and its contents are privileged information that can only be revealed by the government. 

 Whatever the real figures were for 2005, there was nothing to compare them to.  Morales' MAS administration violated existing (and current) laws requiring annual certification of reserves.  Any doubts from D&M's report, could have been resolved by simply hiring another auditing firm.   Despite a public licitation no one was hired to audit the 2005 year, and for that matter 2006, 2007 and 2008.  Finally another certification company Ryder Scott was hired to do the work

This goes to very basic transparency in resource management.   Evo's government has resolutely failed to show where reserves are at.  According to the 2010 report from Revenue Watch  Index of Transparency: Governments and the oil, gas and mining industries  Bolivia's State hydrocarbon sector ranks among the least transparent in the region.  below countries like Chile, Peru, Brazil, and Colombia whose state companies publish regular information on reserves, volumes of sales, etc.

As Revenue Watch points out the success of Chile and Peru:

According to this model, fisca lpolicy and tax collection is the finance ministry’s domain, an autonomous agency regulates and sets policy for the extractive sector, and a state-owned company is in charge of purely commercial activities. The existence of autonomous regulatory agencies overseeing exploration and production of hydrocarbons with relatively strong tax systems and publicly listed yet state-controlled companies creates multiple sources of information on these countries’ extractive sectors, which reflects strong
disclosure of information. They therefore provide examples of strong legal and regulatory structures
that, when implemented effectively, can enhance extractive sector transparency.
During the much pilloried "Neoliberal" administrations after 1997 there was actually a somewhat clear-cut division of responsibilities and independent regulation of the sector.   An independent Hydrocarbons Superintendency regulated all the players in the industry, and acted as a consumer watchdog in such areas as gas stations.  The Hydrocarbons Ministry set policy, and YFBP and its 00 employees were charged with supervising and enforcing the contracts with the private-party partners in exploration, production and refining.
These three public sector entities also provided detailed information on contracts, public licensing rounds, daily gas and oil production volumes, and annual reserves. 

Paradoxically "nationalizing" the hydrocarbons industry and centralizing its operations, has "deregulated" and de-institutionalized the entire sector.  Morales government folded the Superintendency transferring some of its functions into the Ministry of Hydrocarbons, in effect making the Ministry responsible for regulating itself.   YFPB is now theoretically in charge of the entire downstream and upstream sectors of the oil industry, with no real oversight.   The MAS has also De-professionalized and politicized the running of State entities placing political hacks and industry neophytes The ideologically charged and rather confusing MAS constitution has also further muddled the entire industry.    Meanwhile there is little real public information from the authorities, including something as basic as daily gas production which is released not by the State but by a third party company.

It is this ideological backwardness, lack of transparency, and downright technical ignorance that has set the stage for this gas catastrophe.  These conditions have created an environment where the companies with the know-how and money have stopped investing in the sector, which is why reserves are where they are at