Shell, YPFB to Sign Letter of Intent for Hydrocarbons Cooperation

Anglo-Dutch oil major Shell (NYSE: RDS) will sign a letter of intent with Bolivian state oil company YPFB "as soon as possible" for cooperation in Bolivia's hydrocarbons sector, Shell Southern Cone operations president Antonio Assumpcao announced after a meeting with YPFB on Thursday.

The two companies will establish work groups immediately to achieve results in the short term, a YPFB spokesperson quoted Affumecao as saying.

"There are many areas of interest from upstream, exploration and production and eventually to the administration of gas, the commercialization of gas," Affumecao said.

Shell currently has only transport assets in Bolivia, including a 25% share in gas transport company Transredes and a 25% share in the Gas Transbolivianao (GTB) pipeline to Brazil, the spokesperson said.

YPFB has been seeking out partners for joint ventures to exploit the country's roughly 50 trillion cubic feet of natural gas reserves.

The hydrocarbons law passed in May last year requires foreign companies to sign new E&P contracts that include a combined tax and royalty rate of 50% on oil and gas production, which rises to 86.5% including income tax and other contributions.

"We don't have any problem working jointly with YPFB," Assumpcao said.

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