Mesa, Toledo to Sign Gas Export Agreement Aug.4

Bolivia's President Carlos Mesa and his Peruvian counterpart Alejandro Toledo plan to sign on August 4 a letter of intent to create a "special economic zone" to facilitate the export of Bolivian gas to Mexico through a Peruvian port, Bolivia's government news agency ABI reported.

"The text of the letter of intent is still not defined, but they may address the gas issue specifically," a spokesperson from Bolivia's hydrocarbons ministry told BNamericas.

The presidents are scheduled to meet on August 3 in the Peruvian port of Ilo, the port from which Bolivia could eventually export gas, to sign a general economic and social integration agreement, before moving to Lima on August 4 to sign a letter of intent for a possible gas export agreement.

The respective Peruvian and Bolivian foreign ministers, Manuel Rodríguez and Juan Ignacio Siles, announced the plans after meeting in Bolivia on Friday.

The special economic zone would create the "necessary conditions" to allow the construction of a liquefaction plant for Bolivian gas for probable export to Mexico, Rodríguez said.

The economic zone "will allow exports in the first phase of Bolivian gas through a Peruvian port with more favorable conditions in terms of taxes, labor and other aspects that will make the project viable," he said.

The Presidents may not sign anything more specific than the letter of intent, because of the additional time needed to study the technical and financial issues of the project, the spokesperson said.

Article 3 of the new hydrocarbons bill that Mesa presented to congress on Friday (July 30) recognizes natural gas as "a strategic resource" that contributes to "the achievement of a useful and sovereign exit to the Pacific ocean."

Various studies by the companies involved in the Pacific LNG gas export project have shown that exporting gas through Chile is financially more viable, but historical Bolivian resentment against Chile makes the choice of a Chilean port politically risky.

Following the gas referendum that gave Mesa a mandate to use gas as a strategic resource to negotiate a path to the Pacific ocean, the president reiterated his position that Peru is the only possibility while the territorial dispute with Chile remains unresolved.

Peruvian government officials have also promoted possible benefits of cost sharing if Bolivia's Pacific LNG consortium, led by Spanish company Repsol YPF, forms a joint venture with Peru's Camisea natural gas project.

Camisea's Peru LNG export consortium, led by US company Hunt Oil, could start exporting gas to Mexico by 2008.

"Both countries have gas resources, the issue is how we can cooperate to strengthen the development of our natural resources," Peru's energy minister Jaime Quijandría was quoted as saying.

However, the Peruvian and Bolivian governments would need to discuss such a joint venture with the companies involved in Pacific LNG and Peru LNG, Siles said.

A joint export project with Peru could limit the profits for Bolivia, which means the Pacific LNG consortium may prefer to go it alone through Chile, the ministry spokesperson said.

Even though a Peruvian port might not be the option favored by private companies, Mesa's priority is to find an exit to a Pacific port "urgently," the spokesperson said.

Although Mesa denies he is trying to pressure Chile, the closer Bolivia and Peru come to finalizing their project the more political pressure it puts on Chile to give in to Bolivia's demands for sovereignty over territorial access to the Pacific.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.

Our Privacy Pledge

Most Popular Articles

Brent Crude Oil : $51.78/BBL 0.77%
Light Crude Oil : $50.85/BBL 0.83%
Natural Gas : $2.99/MMBtu 4.77%
Updated in last 24 hours