Repsol Threatens Legal Action Against Bolivia Govt

MADRID Aug 27, 2006 (Dow Jones Newswires)

Spanish-Argentine oil company Repsol YPF SA (REP) Sunday warned it could take legal action to defend its interests after authorities in Bolivia raided the offices of its subsidiary there, Andina, and detained executives for the second time.

"These repeated and unjustified actions oblige Repsol to consider taking legal action in independent forums in Bolivia and abroad," Repsol said in a press release.

Repsol said it will "take legal action in defense of its rights if the systematic persecution of the company by Bolivian prosecutors continues."

The Santa Cruz attorney general's office on Friday raided Repsol's offices in Santa Cruz seeking documentation of a 2002 contract that would show Repsol and Brazil's Petroleo Brasileiro SA (PBR), or Petrobras, allegedly exported Bolivian natural gas to Brazil at prices lower than the official rate. Andina legal counsel Saul Encinas Miranda was detained during Friday's raid and the Bolivian authorities said they wanted to detain another former Repsol executive and three former Petrobras executives. Repsol described these actions as "arbitrary and lacking of any legal basis."

In May, officials from the Santa Cruz attorney general's office entered the company's offices to detain then-President Julio Gavito and operations manager Pedro Sanchez for illegally selling $9.2 million worth of crude oil in 2004 and 2005.

Repsol's clashes with Bolivian authorities follow President Evo Morales' May decision to nationalize the country's oil and gas industry. Bolivian authorities then opened negotiations with foreign energy companies to agree on a new framework for their investments in the country.

Repsol said it was prepared to collaborate with Bolivian authorities to clear up the case. However, it also warned that continued legal clashes could jeopardize the ongoing talks.

"The company is increasingly concerned about the current lack of legal protections in Bolivia. In these conditions, the company believes it is very difficult to maintain a dialogue to construct a stable framework that will allow the large investments that the Bolivian hydrocarbon industry needs," Repsol said.

Copyright (c) 2006 Dow Jones & Company, Inc.