A 70-30 joint venture of Brazil's Petroleo Brasileiro SA and Argentina's Perez Companc have won the bidding to acquire Bolivia's two refineries, owned by the Bolivian state oil company Yacimientos Petroliferos Fiscales Bolivianos (YPFB). The firms submitted a $102 million bid for the plants and two pipelines connecting them to nearby international airports.
Sale of the refineries comes at the behest of the International Monetary Fund as a condition of the Bolivian government securing a $35 million structural adjustment payment before the end of 1999.
Completion of the transaction will effectively end YPFB's 62-year reign as a state oil firm. YPFB-Latin America's second state oil company after Mexico's Petroleos Mexicanos-will now simply administer joint-risk contracts between the state and private companies.
Regional analysts consider the price paid for the refineries as reasonable, despite the fact that the plants are technically outdated. Investment banking firm Banque Paribas had set a base value of $97 million for both plants, and the government was pleased with the sole bid it received, as it had expected an offer of $80-100 million.
Petrobras and Perez Companc will spend $15 million during the next 3 years to modernize both refineries, but Bolivian energy analyst Alvaro Rios reckons $30-60 million would be needed to fully upgrade them.
Petrobras's strategy
The purchase of the 27,250 b/d Gualberto Villarroel refinery in Co- chabamba and the 15,000 b/d Guillermo Elder refinery in Santa Cruz-both in central Bolivia-has consolidated the position of Petrobras in Bolivia's hydrocarbons sector.
Although the refineries are small, even by regional standards, Petrobras is optimistic about Bolivia's market potential. The acquisition also includes associated LPG storage facilities, from which Petrobras hopes to export LPG to Peru through a soon-to-be-built products pipeline to the Pacific port of Ilo, or to Brazil or Chile.
In January 2001, Petrobras will begin producing oil from its fields in southern Bolivia. The refinery purchase therefore is part of Petrobras's larger goal to process about 300,000 b/d of oil overseas by 2005 (OGJ, Nov. 22, 1999, p. 25). Aside from using its Bolivian oil production, Petrobras is looking to import crude into Bolivia starting next year to strengthen its refining strategy.
More importantly, the refinery purchase gives Petrobras a level of integration in Bolivia that goes against the spirit of that country's 1993 capitalization law, which paved the way for partial privatization of Bolivia's oil industry. Under this law, YPFB was divided into two upstream units, a transport company, two refineries, and a handful of service companies.
The two upstream units were 50% privatized in 1996 via sales of interests to US firm Amoco Corp. and a consortium of Argentine oil companies led by YPF SA for a combined $571 million.
YPFB's transport division, Transredes, was in turn partially privatized by sale to Enron Corp. and Royal Dutch/ Shell for $263.5 million.
The sale of the refineries means the Brazilian oil company now has greater holdings in Bolivia's petroleum sector than YPFB did in its heyday.
Petrobras not only owns Bolivia's largest natural gas deposits on San Antonio Block near the Argentine border (estimated at 8.8 tcf, or 37.1% of the country's total proven and probable reserves), it also has a 9% share in the Bolivian portion of the Bolivia-Brazil gas export pipeline, and a 51% share in the Brazilian portion.
In addition, Petrobras controls most of the Brazilian hydrocarbons market (although its monopoly recently ended there) and, in Bolivia, has secured a preferential right to export gas to Brazil from its fields or those held in association with other companies. Many companies not doing business with Petrobras have thus been left out in the cold.
Some observers say Petrobras's next move may be to build its own natural gas pipeline from the San Alberto and San Antonio blocks in the south of Bolivia to the Rio Grande dispatch center for export to Brazil, as the company does not agree with the postage stamp tariffs that Transredes wants to introduce starting in 2002.
