Repsol Says Bolivian `Persecution' Hurts Investment

Thomas Mulier and Kristian Rix

Aug. 28 (Bloomberg) -- Repsol YPF SA, Europe's fifth- largest oil company, said ``systematic persecution'' by prosecutors in Bolivia is hurting talks to invest in that country. Repsol may sue over a raid on its headquarters.

Repsol's offices in Bolivia were raided Aug. 25 for the second time this year by officials searching for documents that might prove an alleged illegal agreement between the Spanish oil company and Brazil's Petroleo Brasileiro SA, Bolivian newspaper La Razon said Aug. 26, citing a prosecutor.

Bolivian President Evo Morales in May seized Bolivia's oil and gas fields and refineries from foreign companies and is forcing them to negotiate new contracts to stay in the country. The investigations and raids are hurting confidence in the success of the talks, Repsol said.

``The negotiations over operation and investment are key things here, and this incident doesn't help,'' said Enrique Soldevila, an analyst at Banco BPI in Madrid by phone.

The raid was ``improper'' and Repsol may take the matter to court in Bolivia or an international legal forum, the oil company said yesterday in an e-mailed statement.

``The company is increasingly concerned about the lack of legal security that currently exists in Bolivia,'' the Madrid- based company said.

Bolivian Raids

Three Bolivian prosecutors and 50 police officers searched the company's offices in Santa Cruz looking for evidence that Repsol signed an allegedly illegal contract to sell gas to Petroleo Brasileiro in 2002, bypassing Bolivia's state gas company, La Razon said, citing prosecutor Juan Hugo Iquise.

Repsol's Bolivian unit Andina allegedly sold gas to Petroleo Brasileiro, or Petrobras, at a price lower than the official one at which Bolivia sells gas to Brazil, causing Bolivia $190 million in losses, the paper said.

Repsol defended the legality of the contracts which it said were shown to Bolivia's government and tax office in 2002.

Morales said yesterday in a speech that the country never planned to throw out foreign companies or expropriate their assets ``but they can't act likes bosses or owners, they need to be partners,'' newspaper El Pais reported today. Repsol reiterated its willingness to enter a dialogue with Bolivian authorities to clear up the matter.

Repsol shares fell 10 cents, or 0.4 percent, to 22.44 euros at 12:06 p.m. in Madrid. They have fallen 3.6 percent in the last year, compared with a rise of 4.6 percent of the 13-member Dow Jones Euro Stoxx Oil & Gas (Price) Index.

Repsol's Bolivian offices had been raided in March after prosecutors there claimed Andina illegally exported 230,339 barrels of oil between June 2004 and July 2005. Repsol denies the charge.

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