Bolivian Senate Approves Gas Nationalization Contracts

LA PAZ Mar 30, 2007 (AP)

Bolivia's Senate on Friday approved nearly all the energy nationalization contracts signed months ago with foreign oil companies, clearing up errors that had delayed the deals' implementation.

The lower house of Congress must still approve the contracts, which were signed last October between Bolivia and energy companies including Brazil's Petroleo Brasileiro SA (PBR), or Petrobras; Spanish-Argentine Repsol YPF SA (REP) and France's Total SA (TOT).

President Evo Morales nationalized Bolivia's oil and gas industry on May 1, setting off six months of negotiations during which foreign energy companies agreed to give the state more revenues and majority control of their Bolivian operations.

But the contracts had been held up in the Senate, where Morales' conservative opposition holds a slim majority, after notaries discovered numerous errors.

Morales administration officials said the changes from the original versions were merely clerical, but opposition senators alleged that some were intentionally changed to favor the foreign companies.

Morales last week fired the head of Bolivian state energy company Yacimientos Petroliferos Fiscales over the dispute, and his administration has accepted responsibility for the errors while denying that the contracts were deliberately altered.

"Mistakes were made in the negotiation process, but there are no signs of irregularities or fraud," Hydrocarbons Minister Carlos Villegas said Friday.

During a session that ran until 4 a.m., the Senate signed off on 41 of the 44 original contracts. Negotiations were to continue on two of the outstanding deals, and the third was canceled because Petrobras declined to continue operations at a small, unproven gas field.

The contracts are expected to pass easily next week in the lower house of Congress, which is controlled by Morales' Movement Toward Socialism party.

Copyright (c) 2007 Dow Jones & Company, Inc.

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