MercoPress. South Atlantic News Agency

Repsol-YPF: taking Bolivia to court is “inevitable”

One of the major international players in Bolivia's natural gas industry Repsol-YPF announced that taking the Bolivian government to court over the recent approval of the new energy bill seems “inevitable”.

The new bill drastically raised taxes on production of gas and oil most of which extracted by foreign corporations. An action described as a "confiscatory" action plus the fact it modifies existing contracts.

The Spanish corporation Repsol YPF made its position official in a release from Buenos Aires which was distributed in the eastern Bolivian city of Santa Cruz, heart of gas and oil production in Bolivia.

The recently overhaul "violates essential rights under Bolivian and international judicial systems", says Repsol YPF adding that it "sees as inevitable the legal defence of the rights of its shareholders".

The new law, according to Repsol YPF, affects the shared-risk contracts signed with the Bolivian government, the terms of which "have been fulfilled for more than seven years and have contributed to the development of hydrocarbon activities in the country".

As a result of increased uncertainty in Bolivia, Repsol YPF is also reviewing whether to move ahead with its 2005-2009 investment plan involving 850 million US dollars.

"Under the new legal framework, the most important investment projects would not be profitable, and as a result, will not be undertaken" underlined Repsol YPF.

Foreign oil corporations have in recent years and in the framework of previous legislation which promoted outside investment in the industry, signed 72 risk sharing contracts with the Bolivian government.

Since 1995, Repsol YPF has pumped over a billion US dollars into Bolivia in long-term, risk shared investments generating an estimated 625 million US dollars in government revenue. The Spanish company currently employs some 3,000 people directly and indirectly in Bolivia.

Other international corporations attracted to Bolivia when the industry was opened to the private sector in the nineties include, British Petroleum, British Gas, Brazil's Petrobras and French oil giant Total.

Between 1996 and 2002, foreign corporations invested an estimated 3.7 billion US dollars in hydrocarbons exploration taking Bolivia's proven reserves of natural gas to over 52 trillion cubic feet, second only to Venezuela in Latin America.