Colombia's State Oil Company Ecopetrol is exporting record amounts of crude this year.
Bolivia's State Oil Company, YPFB after 4 years of Evo has turned Bolivia from being self-sufficient in most fuels and natural gas products, into a country that imports gasoline (even from Chile!) and liquefied petroleum gas (from Peru). Gas production is static, despite the record prices and South American demand. In 1999 there were 65 wells drilled in Bolivia, in 2009 there were 3 (three.) Four years of government has meant six different CEO's for Bolivia's National Oil Company. One of the exes is in jail, result of the worst scandal in YPFB company history last year.
Venezuela's PDVSA - once the flagship State Oil Company in the region, is producing a million less barrels of oil per day than it did in the 90's, it is a mismanaged mess, that is deeply in debt.
Reason: Colombia has a sensible hydrocarbons policy, in which the State plays an active role, while also allowing foreign participation and investment. Bolivia and Venezuela do not - in many cases directly due to conscious policies in the last four years that reversed the modernization reforms of the 90's.
Colombia, laws and regulations, modified in 2004, provide a comprehensive framework for the hydrocarbons sector. Centuries of obsessiveness with the language finally pay off in areas other than Magical Realist novels, as the carefully drafted legislation seems pretty clear and comprehensive. Starting with the Constitution and the relevant legislation, the Country's laws set out clearly delimited areas of responsibility and accountability for all actors in the energy sector. The Ministry of Mines is responsible overall for the extractive industries, the Unit for Mining and Energy Planning (UPME) is responsible for research and planning future energy needs, a unit of the Ministry of Mines, the ANH administers the hydrocarbons sector - both private and state companies, the regulatory agency CREQ regulates the energy market of which natural gas is a part. The National Oil Company, Ecopetrol, is the leading oil company in the country.
Ecopetrol unlike YPFB or PDVSA, is not granted a monopoly on production, and is expected to be another competitor in the market.. To make sure it is competitive under this scheme, Colombian legislation ensures Ecopetrol has managerial autonomy, follow standard corporate rules and procedures, and pretty much operates as a modern international hydrocarbons company. And to raise investment funds, it adopted a novel scheme. it raised capital through stock offerings, selling 20% of its shares in offerings in which Colombian citizens had first-right to buy, and there was a monetary and percentage cap as to how much any one individual could buy, to ensure national and "democratically" distributed ownership. With this financing it has begun an ambitious cycle of investments that will boost Colombia;s coffers.
As part of its plan to increase investment and expand the industry, Colombian law allows private and foreign companies of all sizes to participate in the upstream and downstream part of the hydrocarbons business, either individually or as partner with Ecopetrol. Colombia's current legal system, has laws that protect private investment. As a result of this security foreign investment in hyrdrocarbons has soared, exceeding 3.5 Billion dollars a year for the past couple of years.
Drill Evo Drill
On the other hand, Bolivia's newly Nationalized Oil and Gas sector is arguably less transparent than it has been in the last 15 years. Evo got rid of the somewhat competent independent regulatory agency that "neoliberal" governments had set up, placing those responsibilities within the same ministerial bureaucracy. Instead of openly soliciting bids for joint ventures or other projects, the government in past years has enacted decrees unilaterally picking partners and setting up ventures with foreign companies with little oversight.and questionable legality. To make matter worse, the management of the State Oil Company YPFB, starting right from the Morales governments inaguration has been politicized and de-professionalized, with corruption scandals of all sorts and incompetent decisionmaking and planning. This sorry state of affairs has succeeded in stalled production.
While Venezuela at least on paper allows for foreign participation, Evo's Bolivia has policies described by one analyst as "tougher than Cuba's", limits all activities related to hydrocarbons exploration, production, and commercialization to YPFB, though it can sign limited contracts with outside companies. But even these service contracts are in a sort of legal limbo due to the inconsistencies - and outright confusion- in the new Constitution. As a practical matter, the decrees, laws passed since 2005, and the new Constitution do not provide a comprehensive set of rules of the game, to put it simply. It is hard for the players in the Bolivian hydrocarbons sector to know where they stand, and that is true even for the State! Marcelo Quiroga Santa Cruz is probably spinning in his grave. Small wonder that investment by foreign companies in Bolivia have dropped dramatically. Forget harsh government rhetoric, having a Constitution that when it is not being stridently anti-capitalist is confusing and vague when talking about the extent of the States right to contract over resource rights, to private property rights and protection of investments, does not seem like a good place to invest in.
Venezuela and Bolivia's have followed a failed statitst model, For all the talk about Bolivia's "democracy from below" in the words of Evo apologist Jim Schultz, its so-called alternative to "neoliberalism" is bankrupt at its core.
The key here is that countries like Colombia that are doing well, and are doing so outside of the stereotype of the neoliberal/washington consensus/imf bogeyman.. Ecopetrol is a nationally-owned State Company like Yacimientos or PDVSA. But Colombia has built a framework that allows its State-owned company to thrive, while allowing foreign companies with their technology and know-how to actively participate in exploration and production of hyrdrocarbons. This may not be the best system out there, but at least it ensures Colombias public coffers grow, and the industry longs well poised in the long-run. Bolivia, sadly, seems to prefer to imitate the State Oil Company in Venezuela, instead of the one that works in Colombia.
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