Another Energy Company Nationalized As Bolivia Follows In Argentina's Footsteps; More Pain For Spain

Tyler Durden's picture

Two weeks ago, when commenting on the (first of many) nationalizations of energy companies (yes, the collateral shortage we have been discussing over the past year is particularly in effect when it comes to energy assets, although one does not need superficially complicated theories to explain it), in this case of Spanish YPF assets in Argentina we said "How soon until any and every government follows suit in a world in which excess liquidity sloshing around makes expropriation of vital energy producing assets a key prerogative? And how long until the resultant (accelerating) collapse in faith of the monetary system, leads government to declare "monetary self-sufficiency" and confiscate everything that is not nailed down. In exchange for worthless pieces of paper of course. Just to make it "fair"." The answer: two weeks. As of a few hours ago, Bolivia has followed in Argentina's footsteps and has just announced it is nationalizing yet another Spanish company's domestic assets, in this case Red Electrica.

From Bloomberg:

Bolivia is seizing the local assets of Spain’s Red Electrica Corp. to give the government control of the Andean nation’s electricity grid.

 

President Evo Morales signed the nationalization decree today, Communications Minister Amanda Davila said in a telephone interview from La Paz. The Alcobendas, Spain-based company’s investment in its Bolivian unit was inadequate and the energy industry should be controlled by the government, Davila said.

As a reminder...

The takeover comes two weeks after Argentine President Cristina Fernandez de Kirchner announced the seizure of oil company YPF SA (YPFD) from its Madrid-based parent company, citing a lack of investment and the strategic importance of the industry. Since taking power in January 2006, Morales has seized gas fields, oil refineries, pension funds, telecommunications companies and a tin smelter in a bid to increase state control over Bolivia’s industry.

 

“Energy is a strategic sector that should subject to government control,” Davila said. “Red Electrica’s investments were excessively low.”

 

An independent auditor will set compensation to be paid to the Spanish company, Davila said.

Well, at least it's not a tribunal like in Argentina. 

Finally, does Bolivia have no fear at all what the "forceful" EU and Hispanic response to this aggression will be? Guess not: it just may be that if the troubled country is scrambling to sue everyone else in the worldfor expropriating its assets it will achieve... nothing?

So let's see yesterday Aregentina, today Bolivia, tomorrow... the rest of the world that believes the energy industry should be controlled by the government?

Luckily, this news, like every other news, is purely bullish for stocks. Because the alternative, namely that currency wars are dead and buried, and at this point it is all about trade wars escalating into outright trade regime defection, is too preposterous to even contemplate.

Finally, we fully expect the same kinds of nationalization that have happened in the energy area to promptly spread to other commodities most certainly including precious metals, in the process crushing efficient supply.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Pladizow's picture

This is being done because there is No Peak Oil - SARC!

I'd put money on Ecuador being next.

francis_sawyer's picture

  "the energy industry should be controlled by the government, Davila said"

~~~

That always works well...

buzzsaw99's picture

It works better than having some foreign fascist haul it off for you at a price set by them in a rigged market.

francis_sawyer's picture

Yeah... As I always say... "Let the domestic facists set the prices and rig their own markets... You know ~ for the sake of the 'kids' & future generations"...

theTribster's picture

That's exactly right! Every country should jump in the action against Spain, but why stop there? Italy as well, Greece too, if they own anything anymore. I imagine that has already been done by the ECB though. The trick is to do it just before the country gets a bailout, then it is too late because the ECB can fight but the sovereigns cannot.

Steaming_Wookie_Doo's picture

Well it took 500 years, but those Conquistadores are really getting their asses kicked now.

Zero Govt's picture

someone is picking on Spain, they reallly have no influence/muscle it seems, talk about kicking a country when it's down!

this is just not "fair" ..let the UN/IMF usher in global communism, the EU is ready and willing and already sold completely on the idea

 

Buck Johnson's picture

It seems that they know that Spain is circling the drain and are jumping onto assets before the big banks and IMF try to use the US to retake them back.  Spain is done before the end of summer.

NotApplicable's picture

Why would anyone think one form of plunder is better than any other just because it is "local?" It's that kind of thinking that allows it to happen in the first place, ala "Investing with Madoff the Crook."

But he's stealing for meeeeeeee!!!!

steelhead23's picture

OK, its MayDay and this is just dying to be said:  POWER TO THE PEOPLE!

 

Few folks here in the US are familiar with the clash between the likes of JP Morgan and the proponents of public power in the USA.  I don't know about the rest of the country, but here in the PNW, public power is always cheaper than private, for-profit power.  Assuming that this is a bad move for Bolivia is not borne out by the facts.

mendigo's picture

They had I thought reasonable justification - maybe its just possible that some Spanish multinationals are doing a poor job of infrustructure expansion in less than prime markets.

In US we would just regulate and oversite the crap out of them til they beg us to take it off thier hands is that a superior approach? I gather China is investing heavily in natural gas production in us - that will go well.

Seize Mars's picture

"Davilar," verb.

Derived from the last name of Juan Pablo Davila, a Chilean stock trader who, in 1994, accidentally instructed his computer to "buy" when he meant "sell" and who subsequently attempted to recoup his losses by making increasingly unprofitable trades that ultimately lost 0.5 percent of Chile's gross national product.

http://en.wiktionary.org/wiki/davilar

Kind of like, "to Munson."

 

francis_sawyer's picture

The story doesn't end there...

After that... A new delicacy (which doesn't actually exist in nature)... "Chilean Sea Bass", became a popular dish in trendy NYC eateries...

BattlegroundEurope2011's picture

Look at the Privitisation of the UK energy sector.  The CUSTOMER ALWAYS PAYS (More)

GeneMarchbanks's picture

Let's just split the difference and say peak petrobuck.

SRSrocco's picture

WHEN THE DOLLAR DIES THIS GOES INTO FULL GEAR

When the reserve status of the US DOLLAR disintegrates, countires are going to nationalize resources like never seen before.  I would imagine this will not be good for METAL MINES as well.

 

Think for yourself's picture

Well, in a situation like this, I hope you've been stacking.

I was trying to save for an oz of Au which I would have bought in about 6 weeks, but this shifts my priorities. Even though my current Ag:Au ratio is currently above 100:1, I believe I'll go buy 15-20 oz of Ag straight this weekend. Silver is on sale anyways, I'll just hopefully switch some to Au when the value gets closer to 1:10.

 

BidnessMan's picture

Ecuador already did it mostly.  Some private companies remaining with only production contracts.  Ecuador also won a judgment of $18 Billion against Chevron for Texaco's pollution back since the 1960's. (Chevron bought Texaco and inherited the problem).  Will be interesting to see if Ecuador can collect.  Now Ecuador is borrowing billions from China to build hydrolectric dams and other infrastructure, with repayment in oil. Will be interesting to see if the Chinese will finance the new oil refinery Ecuador wants to build.

battle axe's picture

No one expects the Spanish Inquisition! Alert the Armada, we sail at the high tide....

Sudden Debt's picture

Eeuuhhh... You fired the sailors to fund your elephant hunt sire...
Budget cuts...

youngman's picture

Check the weather for hurricanes first

LawsofPhysics's picture

The elite, and their government puppets know well that they can not suspend gravity and the laws of Nature.  An expected move, they want to be sure that their service remains stable.  Yours, not so much.

CPL's picture

I understand some of the BreX associates have been hiding out in Argentina to avoid extradition to Canada where I and tens of thousands of other investors have been waiting in anticipation of their arrival for 20 years.  We are going to throw them a duct tape parade!!!  (yay a parade!)

I'm so glad most of them moved into the oil exploration field personally.  Nothing bad could possibly happen with those numbers.  BreX associates were so well known for their honesty and reporting diligence.

 

I wish the Elites well in their new South American ventures.  They can call us if they need anything like Oil.

odatruf's picture

Are you suggesting that newly discovered oil fields are really only where some bozo in a chopper seeded 10W-40 on the ground from a squirt gun?

You know what comes next: better buckle up in that chopper.  :)

 

Sudden Debt's picture

Lose some weight and throw that pallet of benjamins out, the weight is pulling you down.

CPL's picture

Definition of an oil man in a peak sweet light crude situation:  A liar standing over a hole telling you there's something down there.

 

It strikes me as odd that places that have been regarded as low yeild areas have suddenly increased in their output in an area of the world so agressively closing down refineries.  It is just so counter productive to the cause of locking down a national energy supply I'm never quite sure what half these whack jobs making the decisions are thinking.

Doesn't matter how much oil any rig can pump, it's refining it that makes it useable.  The shit pulled out burns, but people wouldn't want to put it in an engine they would want to use again.

Joebloinvestor's picture

There is gonna be BIG FALLOUT over this (maybe).

What is the deal with South American countries siezing and nationalizing with abandon?

Sounds like a race to claim assets.

 

LawsofPhysics's picture

South Americans don't trust paper promises.  They know that possession is the law.

machineh's picture

... and that maltreating foreign investors is a surefire road to riches ... as the immense population of billionaires in Venezuela, Argentina and Bolivia proves conclusively.

Suerte, comrade!

drysafe's picture

But may be they're just trying to reduce the number of billionaires in Europe and the US?

LawsofPhysics's picture

LOL!!!, Yeah, you are an investor and you want to give me some paper in exchange for a physical asset that keeps any economy going.  No thanks, I'll keep my own corrupt game a float a bit longer.  If by "mistreat" you mean no longer accept worthless fraudulent paper, then you would be correct.

pods's picture

Maybe they have read "Confessions of an Economic Hitman?"

Hansel's picture

Yeah, what's with these dumbass South American countries nationalizing energy companies?  Everyone knows that if you are going to nationalize something, you nationalize insurance companies (AIG), mortgage companies (Fannie and Freddie) and car companies/government work programs (GM and Chrysler).  Why the fuck would a country ever need oil?!

hedgeless_horseman's picture

 

 

Ding ding ding!  Ladies and gentlemen, we have a winner!

AnAnonymous's picture

Might be they were not convinced by US citizen propaganda, you know, that stuffing your coffers with freshly emitted paper while exporting your tangible assets is the best to aim.

Maybe they consider that they take the risks, not the US citizens, that they will be the ones to go around trying to find what to buy with their marvellous USD or euro electronic bits collection.

US citizens, they have already bought what they wanted with their USD and euros...

HarryM's picture

Like vultures ripping out flesh of a  - not quite dead yet animal - ,  too weak to fight back.

 

How do we get in on the action? (LOL)

Momauguin Joe's picture

Check Bush family caribbean coastal property in Honduras. Banana plantations already in place and producing.

buzzsaw99's picture

Good. Any country that would allow foreign bankers to trade two ply for real assets is a fool.

AnAnonymous's picture

Or maybe people who think they can walk away from an extortion scheme, just like that, are the fools.

buzzsaw99's picture

That may have been true even twenty years ago but the foreign peons are getting uppity these days and imo it is well past time. The Empire has a lot of balls to break and both knees are worn out.

Marco's picture

Keeping most of the profits inside the country is easy enough to achieve with taxation ... this is just posturing.

It's not like they don't need foreign expertise to build and run these things ...

Pladizow's picture

So tax and keep paper profits while the energy is exported?

Marco's picture

If you want more of it to stay in the country just keep increasing export taxes till you're satisfied (just like China does with rare metals for instance).

buzzsaw99's picture

That's why we better suck it out first and burn it before they learn how to do for themselves. LMAO!

AnAnonymous's picture

That is possible.

That might be why US citizens have launched a race to deplete the planet's resources.

NotApplicable's picture

Luckily there's no such thing as "US citizens," so it's all in your head.

prole's picture

US citizensinicity is eternal. Like General Chao's chiken and pork Flied rice, always on Menu! I will make a Great Leap Forward off roof of FoxConn Tower to make an international statement against great natural resource stealing theft of US Citizens!! (isms)

Do you want spring roll?

akak's picture

 

That might be why US citizens have launched a race to deplete the planet's resources.

Make me laugh!

How richly ironic and hypocritical that is, coming as it does from a loyal citizen of the totalitarian Communist Chinese regime, which is now not only the #1 polluter on the face of the earth, but is engaged in an unprecedently rapid and manic race for just about every natural resource on the face of the earth ---- even to the point of ripping-up, toxifying and destroying hundreds of square miles of its OWN territory in the mad frenzy to extract gold, silver, and especially rare earth minerals, just in order to hoard them from the rest of the world.

But the rampant denialism and hypocrisy of Chinese Citizenism is well known.

Chinese Citizenism nature is infernal.