MercoPress. South Atlantic News Agency

Bolivia says gas supply to neighbors is “guaranteed”

Bolivia said Wednesday that natural gas provision to Brazil and Argentina are guaranteed following this week's nationalization of the Transredes pipeline system which was partly owned by UK's Ashmore and Shell.

Hydrocarbons minister Carlos Villegas said during a press conference in La Paz that the full transfer of the system to Bolivia's government owned oil corporation YPFB will not influence output pumping to neighboring countries, which is currently 32 million cubic meters per day. Investment plans won't be affected either. Bolivia has a potential production of 40 million cubic meters per day but since beginning to take over foreign companies has been facing chronic difficulties to comply with the two neighbors and domestic demand, particularly in the winter months. Brazil currently takes 31 million, the domestic market 6 to 7 million and the rest is pumped to Argentina. The two billion US dollars annual natural gas exports are Bolivia's main source of foreign trade and government revenue. Villegas said the decision to take over Transredes "will have no effect or change in the company's projects. We recently held a three-party ministerial meeting and have agreed to comply with export agreements". He said that eight construction and pipeline expansion projects of Transredes will continue as planned, although no details or funds involved were given. The takeover was announced by Bolivia's President Evo Morales on Monday, a month after he ordered the firms to transfer the shares to the Bolivian government. "With the nationalization we have to pay Shell and Ashmore 240 million US dollars for their shares" revealed Villegas. He added that the Bolivian government, which already had a 47% stake in Transredes, aimed only to buy a small stake from Shell and Ashmore in order to become the majority shareholder. But Ashmore "refused", because it would have given Bolivia a strong say in management. Ashmore nearly purchased Shell's 25% stake in Transredes in May last year but according to Villegas "the acquisition was never completed". La Paz press reported that the Morales administration accused Transredes private partners of "conspiring in Bolivian politics". Apparently last week Transredes operators presented a project to expand a pipeline to the governor of a province that is at loggerheads with the central government over an autonomy initiative. Villegas said that contrary to what happened with Transredes, there have been no problems with the takeover of Spain's Repsol-YPF and US Pan American Energy interests in Bolivia. However Bolivia must almost double its natural gas production if it is to comply with current demand plus 14 million cubic meters by 2010 as was agreed with Argentina. The volume should jump to 27 million cubic meters in the next twenty years according to the agreement signed last year between presidents Morales and Kirchner.