MercoPress. South Atlantic News Agency

Russia's Gazprom to develop Bolivia's top natural gas deposits

The world's largest gas company, Russia's Gazprom and Bolivia's government owned oil corporation YPFB signed this week in La Paz an accord to explore for gas in three of the country's southern fields.

Gazprom will have access to three areas reserved for YPFB and which hold the country's largest proven natural gas reserves. According to a release from Gazprom Bolivia is intent in developing its gas reserves and investment in the range of 3 billion US dollars is needed to increase production and comply with supply contracts signed with Argentina and Brazil. Stanislav Tsygankov, Gazprom director of foreign relations, signed the accord with YPFB president Santos Ramirez. The release also points out that Gazprom held talks with Repsol, Argentina's Tecpetrol and Bolivia's Empresa Electrica Guaracachi about possible cooperation. Under the agreement Gazprom will conduct geological exploration in three blocks in the province of Tarija, which have estimated reserves of 300 billion cu. m. of natural gas. After exploration is carried out next year, the formation of a joint enterprise controlled by YPFB will be discussed. Gazprom did not reveal the investment involved, but one executive stated that it would be "billions of dollars" and could also include oil and electricity production in Bolivia. Gazprom in the release points out that "most of the gas deposits currently in production in Bolivia are nearly exhausted and the investment needed to produce gas is high". It also points out that "political risks are also considerable". In May 2006, Bolivian President Evo Morales nationalized all hydrocarbon resources and foreign companies operating in Bolivia were given 180 days to agree to hand over 82% of their income to the government or else leave the country. Gazprom is one of the first foreign companies to enter Bolivia since the nationalization. In addition, the country's four gas-producing provinces, including Tarija, have come into conflict with the federal government overt the distribution of profits from hydrocarbons and intend to hold a referendum on autonomy in May or June. President Evo Morales hailed the contract as a great achievement that will enable Bolivia to comply "with supply commitments to neighbors". "The accord will speed the execution of needed investments", said President Morales. Bolivia supplies Brazil with 27 to 30 million cubic meters of gas per day and 2.5 to 3 million to Argentina, but only last year signed to increase the volume to 7.7 million, which Morales recently admitted it can't honor without hindering domestic demand