Warnings in Bolivia that the sale of gas to Argentina is at risk

Pablo Stefanoni, March 19

In the midst of a ferocious tug of war between the Bolivian government and the opposition over the new gas contracts, the president of the state company YPFB, Manuel Morales Olivera, yesterday warned, “the sale of gas to Argentina is at risk”.

He was referring to complying with the convention agreed to between presidents Evo Morales and Nestor Kirchner in October last year, that hoped to increase the current 7.7 million cubic metres sold daily to around 27 million by 2010, when the denominated Gas Duct of the North East will be finished being built.

“If there are more delays in the promulgation of the contracts, there will be more delay in investments and we run the risk of not having sufficient production for Argentina... At the moment, the exportation of gas to Brazil is guaranteed, what is at risk is sale to Argentina”, said Morales Olivera to the newspaper El Deber, repeated this later on, with greater emphasis, in an extensive interview with Radio Erbol.

The strong content in the declarations was aimed at the Senate, dominated by the opposition, and which is adamant in opposing the approval of the 44 contracts signed between YPFB and the ten transnationals operating in Bolivia.

The right wing denounced that there were differences between the contracts signed on October 28 and those that finally reached congress, especially in regards to the annexes that determined “recoverable costs” and, therefore, the profitability of the companies. Those in the state petroleum company justified this fact saying they were errors “of forms”.

After passing without any problem through the lower house, which is dominate by a large government majority, the contracts were approved by the senate last November – at full speed and without having been read – in a session where the opposition did not participate. But the contracts had to return to congress given the errors committed in the writing of the law that enacted them, giving the opposition a new opportunity to raise some of the nationalist banners they had forgotten about in the 90s, leaving the government offside.

As Morales Olivera himself admitted, one of the points of contention is the number of blunders committed in the agreement with Petrobras. The “hard” annex was softened in the face of the Brazilian’s demands, because of the more favourable conditions achieved by Repsol (Spanish) and Total (France), but the already rejected version was mistakenly sent to congress. The opposition launched itself into finding the leftover and missing paragraphs, and accused the government of “ideological falsification” and “economic damage to the State”.

The parliamentarians decided to organise an investigation commission and have said they will call to give evidence the minister of the sector, Carlos Villegas, his predecessor Andres Soliz Rada, the ex-head of YPFB, Juan Carlos Ortiz, the last two moved away from their positions due to divergences with the executive power.

Days before, Soliz Rada came out denouncing that the contracts “were moving away from the spirit of the nationalisation”.

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Bolivia to Activate Transnational Supervision

La Paz, Mar 21 (Prensa Latina) The Bolivian government will shape a permanent supervisory committee that will be in charge of approving the recoverable expenses of oil transnationals, and avoiding embezzlement or extravagant expenses, press reported on Wednesday.

Hydrocarbon Minister Carlos Villegas announced the decision in a congressional hearing, in which he said, faced with opposition criticism, "the recoverable expenses are part of any contract, and this is not from another world."

Villegas ratified the advantages of the mentioned negotiations for the State in that hearing, in which the mistakes of 44 oil contracts that were signed by the government with 12 foreign companies are currently investigated, according to La Opinion Daily.

Deputy of government Movement Towards Socialism (MAS) Milena Hinojosa considered that the initiative´s success will depend on the executive´s use of the right people.

This kind of committee has always been included in the contracts. We have improved things in a great extent. There are just some aspects that we were not able to correct, as that of millionaire salaries of transnational executives, she said.

The deputy also said the contract issue is not about shape. It is about law instead, because they could prevent the State from recovering millions of dollars.