Bolivia legislates new laws for oil profits

The Bolivian government on Tuesday night enacted a law that will raise taxes on gas and oil and force changes to existing contracts with oil producers.

One of the most alarming provisions of the law to foreign companies operating in the country replaces existing risk-sharing agreements with new arrangements imposed by the government within 180 days of the law’s enactment.

The new law also imposes a non-deductible 32 percent tax at the wellhead in addition to the current 18 percent royalty.

It also takes title for gas resources from the companies; one interpretation of this provision of the law is that companies would be violating the law if they export gas from the country.

Global companies such as Petrobras, Repsol, Total, British Gas, and BP, which operate in Bolivia, have begun to look at ways to lessen the impact of the legislation on their operations.

Arbitration is one alternative being considered by some companies, but one analyst says that it would probably be difficult for any company choosing that tactic to operate in the country after going through that process.

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