Weekly Report - 26 September 2006

BOLIVIA | Snag in gas deal with Argentina. The government of Argentina has proposed changes to the deal under which it agreed an increased price of US$5 per million btu for the gas it imports from Bolivia and a Bolivian commitment to supply up to 27.7m cubic metres daily of gas when Argentina's northeastern pipeline came onstream. The deal included an Argentine commitment to install a gas liquefaction plant, which Bolivia wanted to situate in Yacuiba, next to Argentina's northern border. Argentina wants the plant located in the Argentine port of Rosario, on the Paraná river, and wants a share in the proceeds. Bolivia's former hydrocarbons minister, Andrés Soliz, who opposed these changes last week urged his successor, Carlos Villegas, not to give in to Argentine demands. Indeed, he urged him not to go ahead with the increase in supply unless Argentina agrees to Bolivia's terms regarding location and full control of the plant and its proceeds.

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