Tuesday, July 12, 2005

Bolivia: Gas Companies Want Guarantees

Now this should be interesting to see.

European Gas Companies doing business in Bolivia, including Repsol, British Petroleum and Total are requesting arbitration under the terms of the Reciprocal Treaties on Protection of Investments signed by the countries of origin, Spain, England and France, signed with Bolivia.

Remember, that Bolivia's prior government, through YPFB had signed contracts with several companies, guaranteeing the conditions for investment, setting the rate for gas and oil royalties (18%)as well as guaranteeing international mediation for any disputes between governement and company. The nation-wide referendum and the new oil and gas law, setting higher taxes, was justified by a finding that the previous contracts were invalid on their face, because they were not ratified by Congress.
But this treaty was signed by Bolivia's government, and was ratified by the Congress.

The corporations will no doubt argue , that they signed binding contracts based on Bolivia's guarantees of protecting their investment, and relying on that they invested the 3 or more billion dollars they put in the country during the past decade. Bolivia by changing the rules on them, as well as threatening to nationalize these holdings, is in breach, particularly since it received the benefits of the oil companies performance.