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8 Hous. L. Rev. 472 (1970-1971)
Gulf Oil's Experience in Bolivia

handle is hein.journals/hulr8 and id is 506 raw text is: GULF OIL'S EXPERIENCE IN BOLIVIA by Thomas D. Lumpkin* Although some very delicate negotiations are continuing with Bolivia, I am going to undertake to discuss with you, as candidly and as objective- ly as possible, the Bolivian situation as I understand it. And let me say that we in Gulf hope the negotiations will be in the best overall interest of Bolivia and its neighbors and at the same time provide a method whereby Gulf can be compensated for its losses there. Today the petroleum industry in Bolivia is totally and captively in the hands of the state. Gulf Oil last October was abruptly expropriated after almost 13 years of risk and hard work, after spending almost $150 million to find and develop Bolivia's oil and gas resources. I don't know if it has ever been said before quite this way-but in- ternational business relations require a sound footing. And that foundation must be provided by the host country-continuously and not sporadically. It took 10 years and $95 million before Gulf could export one drop of oil from Bolivia, and Gulf did not realize one dollar in overall operating profit during the entire period it operated in Bolivia. We had not yet realiz- ed even a small return on our investment when forces of the Bolivian Army marched into the offices of Bolivian Gulf Oil Company at Santa Cruz on October 17, 1969. The decree of nationalization followed the next day. What should have been a profitable relationship for both Bolivia and Gulf had been inexplicably shattered. Our properties were illegally seized, and we were expelled, expropriated, kicked out. We had lost our invest- ment and potential profits. Bolivia has also suffered irreparable damage. But perhaps most importantly, she has lost the confidence of members of the international business community. Why did things happen this way? We really don't know. Every attempt to explain it seems to fall short. I believe, however, that the case is worth examining in some detail for the benefit of all here today. Had Bolivian Gulf acted irresponsibly, then I could view the sudden nationalization of the company with a bit more clarity. But the problem I encounter every time I try to analyze the case is simply this: We acted the way a foreign company is supposed to act in this day and time in order to create and maintain a climate of respect and trust within a host country. We acted responsibly in Bolivia, and we were responsive to the need and concerns of that nation. Gulf does business in more than 50 countries. We began operations in Bolivia under an arrangement made with the then government of President Paz Estenssoro in 1956. After 4 years of explora- * LL.B., Univ. of Texas; Executive Vice President, Gulf Oil Latin America.

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