MercoPress. South Atlantic News Agency

Oil companies want to discuss taxes with Bolivia

Three multinational corporations that hold concessions over nearly 63% of Bolivia's massive proven reserves of natural gas requested formal talks with the government to discuss the country's new hydrocarbons legislation which significantly boosts levies.

Hydrocarbons Minister Jaime Dunn confirmed Tuesday that Spain's Repsol YPF, British Gas and French giant Total-Fina-Elf had sent letters to caretaker Bolivian President Eduardo Rodriguez proposing talks in the framework of investment-protection agreements currently effective between their home countries and Bolivia.

A number of foreign-owned oil and gas companies operating in Bolivia have threatened to take the Bolivian government before international courts of arbitration if La Paz tried to unilaterally alter the terms of 30-year contracts agreed and signed in the mid-1990s.

"They're asking us to start negotiations with the goal of finding amicable solutions to problems originating from the approval of the new hydrocarbons law that, in their judgment, give rise to controversy about the investments they have made" Minister Dunn told the press in La Paz.

The time table for talks, the minister revealed, is the 180 days set by the new hydrocarbons law for the companies to adjust to the terms of the controversial legislation, and which began counting last March.

The oil and gas industry main complaint is the new fiscal regime that includes an additional 32% tax to the 18% royalty already levied on energy production.

Mr. Dunn said that the government will proceed to an "exhaustive legal analysis" of the bill before sitting to talk with the three companies, which he described as important players in Bolivia's energy sector.

"Technically, we're going to see what parameters can be put in place so that corporations accept the terms of the new law" in a "harmonization and conciliation" spirit process, underlined Mr. Dunn.

The new controversial hydrocarbons legislation, reached after months of political turmoil and street protests, continues to polarize opinions in Bolivia.

Indian, peasant and radical organizations are fighting for the full nationalization of the industry; moderate groups want a gradual increase in levies and the conservatives argue contracts must be respected recalling that there's no way the huge investments required to extract the South American continent's second largest proven reserves can be done without foreign participation.