MercoPress. South Atlantic News Agency

Govt. ratifies gas exports thru end-2005, but price uncertain.

Bolivian authorities have agreed to extend natural gas exports to Argentina until December this year, but left the price negotiation up to Bolivia's state oil company YPFB and private gas producers, newspapers reported.

Argentina's federal planning minister Julio de Vido met with Bolivia's President Carlos Mesa on Friday in La Paz, when the deal was announced.

Bolivia's hydrocarbons minister Guillermo Torres confirmed that gas exports to Argentina would increase to 6.5 million cubic meters a day (mm3/d) from 4mm3/d at present by end-2005, in line with an agreement signed in October 2004 by Mesa and Argentine President Néstor Kirchner.

The proposed Gasoducto del Noreste (GNA) would add another 20mm3/d of gas exports to Argentina by 2007.

"To build the pipeline companies need to have some clarification on the price for the [gas] supply," Standard & Poor's analyst Pablo Lutereau told BNamericas.

"The agreement on the volume is not as important as the agreement on the price because Bolivia has enough natural gas to export whatever amount Argentina can take," Lutereau said.

However, neither Torres nor de Vido said whether the price of the additional exports would be the current one of some US$1.60/mBTU or whether Argentina would accept Bolivia's proposed 25% hike to US$2/mBTU.

"We have left the companies free to negotiate the price," Torres said in a press conference following the meeting.

YPFB is currently negotiating tariffs with Spanish gas producer Repsol YPF and Brazil's Petrobras in the Bolivian city of Santa Cruz, Torres added.

Bolivia says Argentina should pay US$2/mBTU because that is the amount Brazil currently pays for about 20mm3/d of Bolivian gas, but Argentina says it should pay the same price that it receives from gas exports to Chile, which is US$1.40-1.60/mBTU.

Torres had threatened to cut off gas exports by January 10 if Argentina did not accept the price increase.

The agreement reached on Friday covers exports of dry gas, but natural gas liquids (NGLs) will remain in Bolivia to be industrialized at a petrochemicals plant to be built near the border with Argentina at Villamontes, Torres said.

Neither Bolivian nor Argentine officials commented on when this plant could be built, but de Vido said Argentina is ready to invest in the project.

De Vido also said Argentina is studying expanding Bolivia's duty free zone in the province of Rosario to allow that country to install a gas liquefaction plant to produce liquefied natural gas (LNG) for export to North America.

Bolivia's long awaited project to export LNG is stalled because the government has not been able to decide on whether to export the gas through Chile or Peru. Bolivia does not have sovereign access to the coast.