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Gold/Mining/Energy : LNG -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (101)	7/19/2004 9:44:23 AM
From: Dennis Roth	Respond to of 919

Spain's Repsol breathes easier after Bolivia vote reuters.com Mon Jul 19, 2004 09:12 AM ET By Alejandro Lifschitz MADRID, July 19 (Reuters) - Spanish oil and gas group Repsol YPF (REP.MC: Quote, Profile, Research) can breathe easier after Bolivian voters backed a government plan that would allow Repsol to export Bolivian natural gas to North America, analysts said on Monday. Gas is Bolivia's richest resource, and Bolivia is the source of more than 20 percent of Repsol's gas reserves. Failure in Sunday's referendum would have undermined the government of President Carlos Mesa and cast uncertainty over a plan by Repsol and its partners to invest up to 6.0 billion euros ($7.5 billion) by 2009 on the infrastructure to export gas to Mexico and the United States. Voters backed the government on all five questions on the referendum, including one that grants Mesa permission to negotiate with Chile over the rights to build a gas pipeline from landlocked Bolivia through territory over which the two countries had fought a war. The victory allows Repsol, which has the 10th largest reserves of any company in the world, to move forward with plans to export gas to Mexico and California via Pacific routes. Currently Repsol sells Bolivian gas in Brazil and Argentina. Last October, a violent peasant uprising against a plan to export gas through Chile brought down the government of former President Gonzalo Sanchez de Lozada. "This (the vote) is positive for Repsol. It was a concern that we have. Bolivia represents a significant portion of its (Repsol's) gas reserves. And the reserves are only good if they can be sold," said Erwin van Lumich, who covers Repsol for Fitch Ratings. Portuguese bank BPI said in a research note the result was "a relief for companies with interests for the region ... although under a more difficult scenario". The referendum triples export taxes to as much as 50 percent and strengthens the government's hand versus foreign firms such as Repsol, but Repsol will know what the rules are and can deal with a president strengthened politically by his victory. Repsol's tax rate is already close to 50 percent in Bolivia, analysts said. A PLAN FOR BOLIVIA Repsol built up its Bolivian gas reserves in the 1990s and made the country central to its Latin American strategy. After being bitten by the 2002 economic crisis in Argentina -- the site of its largest gas reserves -- Repsol was even more eager to diversify. The Bolivian plan, built around the consortium Pacific LNG, is still in feasibility studies and is one of Repsol's largest planned investments in exploration and production after 2007. Pacific LNG, which includes Britain's BG (BG.L: Quote, Profile, Research) and BP (BP.L: Quote, Profile, Research) and Argentina's Bridas, plans to build a gas liquefication plant at a port in either Chile or Peru, which would be fed by Bolivian gas transported by pipeline. Analysts say Repsol would prefer to build the pipeline through Chile but that the route would be complicated politically by Bolivia's longstanding complaint at having lost its only access to the sea in a 19th century war with Chile. "It (the vote) opens the possibility of exporting gas through Chile. It's a necessary step for the Pacific LNG project. Peru is a more expensive option," said Maria Martinez, an analyst for Portuguese bank Espirito Santo.