Bolivia Pays Brazil for Oil Plants and Fines It for More than Buyback Price

Wednesday, 27 June 2007

Bolivia took control Tuesday, June 26, of two refineries it bought back from Brazil's Petrobras following a long dispute over the final price and insurance policy reported the Bolivian news agency. Last June 11 the Bolivian government handed the first US$ 56 million check, of a total US$ 112 million, but refused to continue the operation until Petrobras paid for the insurance policies of both plants in Cochabamba and Santa Cruz.

The policy for US$ 180 million covers all damage risks to the plant, equipment, inventory as well as any possible damages to third parties or their properties, said Petrobras.

Bolivian Energy Minister Carlos Villegas said the plants have a processing capacity of 40.000 barrels per day which is equivalent to 100% domestic demand for special and premium gasoline plus 70% of diesel.

Petrobras acquired the refineries in 1994 for US$ 104 million when Bolivia was involved in a privatization spree and opening the exploitation of natural resources to foreign capital.

Under current president Evo Morales the policy has reversed 180 degrees and the Bolivian government through its oil company is taking back the refineries and nationalizing gas and oil reserves.

In related news Petrobras said it would not be paying a fine imposed by the Bolivian government for alleged irregularities during past oil exports.

Bolivia's government has started legal proceedings against the company that could result in a fine of up to US$ 239 million, Bolivian newspapers said last week.

"We haven't been notified of the fine yet. We only know about it from the press, and we won't pay it," the Petrobras press official said.

Last year, Bolivia accused Spanish-Argentine energy company Repsol-YPF and Petrobras of illegally exporting hydrocarbons.

According to the newspaper reports, Bolivia accuses Petrobras' refining unit of having exported oil worth about US$ 188 million in 2004 and 2005 without notifying a government anti-drug unit. Under Bolivian anti-drug legislation, oil exports have to be reported to the anti-drug unit in order to ensure they won't end up in the hand of drug traffickers.

However Petrobras alleges the legislation wasn't in effect yet at the time of the supposed irregular exports, Petrobras said.

First published at Brazzil Magazine