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Bolivia agrees to sell more gas to Argentina under an ‘interruptible’ contract

Thursday, July 19th 2012 - 08:23 UTC
Full article 22 comments
Cristina Fernandez and Evo Morales celebrate the increased bilateral relations Cristina Fernandez and Evo Morales celebrate the increased bilateral relations

Argentina and Bolivia signed on Wednesday new agreements to increase the sale of Bolivian natural gas to its southern neighbour but the controversial issue of a price review went unnoticed.

The documents were signed in the city of Cochabamba during the one day visit of President Cristina Fernandez to meet with her peer Evo Morales to address besides energy issues, bilateral relations and the current situation in the region.

The president of Bolivia’s government oil company YPBF, Carlos Villegas and Argentina’s Enarsa, Ezequiel Espinosa signed the “interruptible natural gas purchase and sale” contract with additional volumes.

Under the new wording Bolivia will export an extra six million cubic metres per day of gas in 2012 and 2013, but subject to the ‘interruptible’ clause meaning no side will be forced to pay fines if either of them does not comply with the deal.

Argentine Federal Planning minister Julio De Vido underlined the significance of the agreement since Bolivia has available gas and Argentina is completing a gas pipeline between the province of Salta and Buenos Aires.

Natural gas exports to Argentina jumped last May from 7 to 13.5 million cubic metres per day, mainly because a new processing plant built in Bolivia by a consortia headed by Spain’s Repsol.

Under the new clauses Argentina will purchase additional volumes of natural gas, besides the original contract which commands Bolivia to increase sustainedly shipments up to 27 million cubic metres per day by 2017.

De Vido and his counterpart Juan Jose Sosa signed an intention letter by which Enarsa will purchase propane, butane and liquefied gas beginning the second half of 2014. The sale of these fuels will become effective when Bolivia concludes the construction of two liquid natural gas splitting plants, which will also be exported to Brazil.

The Argentine president described the documents as “very important” and underlined the capacity of the Juana Azurduy pipeline that will have a capacity of 27 million cubic metres per day.

Regarding Bolivian natural gas prices Minister De Vido said that they were not part of the talks, “since there is no reason to modify accords signed by both governments with a parametric which enables to adjust costs every quarter taking into account a basket of international fuel prices”.

“There are no talks on modifying those accords”, underlined De Vido. “This gas has a buyer in Argentina: our manufacturing industries, residential areas among other sectors. Argentina will be a sustained and increasing consumer of Bolivian gas” he added.

Foreign ministers Hector Timerman and David Choquehuanca together with Bolivian communications minister Amanda Davila also signed other cooperation agreements in areas such as digital technology, university degrees, education, technology exchange, health and immigration.

Bolivian president Morales said the visit of his peer was significant and helped boost regional projects and to defend democracy. The country’s first indigenous president also criticized what he described as “the congressional coup” in Paraguay with the purpose of removing a popular and elected leader.

In the afternoon and before heading back to Argentina, Cristina Fernández visited the Heroínas de la Coronilla monument, a memorial to the women who fought the Spanish Empire in 1812.

Top Comments

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  • Alexei

    “subject to the ‘interruptible’ clause meaning no side will be forced to pay fines if either of them does not comply with the deal.”

    Very wise, thinking ahead. The Argentine government tends not to pay what it owes. The Bolivians are obviously well aware of this. They still want that bit of Chile though, so they have to play with Argentina.

    Jul 19th, 2012 - 08:41 am 0
  • Idlehands

    They'd have been better off supplying the multi billion dollar Indian mining project than signing an unenforceable contract with Argentina.

    Jul 19th, 2012 - 09:10 am 0
  • mclayoscar

    If Argentina plays its cards right it maybe able to buy energy cheaper from the Falklands in a few years, one hundred percent payment up front of course.

    Jul 19th, 2012 - 10:49 am 0
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