MercoPress. South Atlantic News Agency

Bolivia and Peru agree energy complementation.

An “energy complementation” letter of intent will be signed this week when Bolivian president Carlos Mesa makes an official state visit to Peru.

Under the letter of intent Peru will provide Bolivia with a Pacific port from which to export its massive natural gas reserves which have been the cause of serious political and social turmoil in the landlocked country.

"It clearly specifies how Bolivian natural gas will be exported from a Peruvian port and the creation of a special economic zone", said Bolivian Foreign Affairs Minister Juan Ignacio Siles.

"The understanding at the highest strategic level will mean energy complementation of our two economies", indicated Manuel Rodriguez, Peruvian Foreign Affairs Minister.

Although most of the details will be announced when Mr. Mesa meets President Alejandro Toledo, it is believed the Peruvian port and adjacent economic area will be in Ilo, 420 kilometers from La Paz, Bolivia's capital.

Even when exporting Bolivian natural gas through Chilean territory would be more profitable and less costly, the current volatile situation between both countries locked in a century long claim over the northern territories that once belonged to Bolivia makes it non viable in the short term.

"In the current conditions, exporting gas through Chile would generate a social upheaval", warned Bolivian president Mesa, following a referendum which introduces modifications to the current hydrocarbons bill and gives the government a greater role in oil and gas policies.

Bolivia that lost its sea access to Chile in the 1879 Pacific war has repeatedly demanded a port and "sovereign" corridor through now Chilean territory.

However Chile's state policy is yes to a corridor and port facilities but not a word about sovereignty.

Faced with this situation Bolivian president Mesa is betting on the Peruvian option. Peru will facilitate a "special economic zone" with fiscal, labor and administrative autonomy, where "Bolivia will establish a natural gas liquefying plant", anticipated Mr. Siles.

From the liquefying plant Bolivia expects to export natural gas to California and Mexico, and hopefully change the course of a country that in spite of its massive resources is among the poorest in the world.