MercoPress. South Atlantic News Agency

Bolivia arrests Repsol-YPF top officials

Bolivian police on Wednesday arrested and later released on bail two top Spanish oil company Repsol YPF officials charged with smuggling. The arrests came after the two men, a Spaniard and an Argentine who had been in hiding, appeared voluntarily to be questioned by prosecutors.

A company spokesman said the officials were being held at a police office in the eastern Bolivian city of Santa Cruz, and were later released on bail.

Julio Gavito, a Spanish citizen who heads Repsol YPF Bolivian unit Andina, and Argentine Pedro Sanchez, the company's Operations Director made an unexpected appearance late Tuesday at the Customs Service headquarters, where they testified for six hours.

Gavito and Sanchez had been in hiding since last Thursday when Bolivian prosecutors turned up at Repsol YPF offices in Santa Cruz with 20 police officers.

Bolivian authorities want to question Gavito and Sanchez in connection with allegations that Andina shipped 9.2 million US dollars of crude oil from Bolivia between June 2004 and July 2005 without securing the necessary authorization or paying taxes and duties, which configures "contraband". Andina and Repsol have denied any wrongdoing.

Early February Andina formally replied to Bolivia's Customs Service charges that the company used pipelines and tank trucks to smuggle fuel to Chile and Argentina.

Bolivian Customs Service officials also charged Andina with falsifying export documents.

Last month Mr. Gavito was quoted stating that Repsol-YPF would do the utmost to remain in Bolivia where the company holds a significant share of the country's proven giant gas reserves estimated in 48 trillion cubic feet.

Natural gas, Bolivia's main resource is currently extracted by foreign companies which besides Repsol-YPF include Brazilian government owned Petrobras, Britain's BG Group and BP, French major Total and U.S.-based Exxon-Mobil.

President Evo Morales, the first indigenous Bolivian to take office, has vowed to recover the energy industry for Bolivia arguing that foreign companies have made windfall profits exploiting the country's hydrocarbons. However he also promised that the procedure would not be confiscatory or ignoring private property or the rule of the law.