Vintage to cite treaty in Bolivian lawsuit

Aug. 15, 2005
Vintage Petroleum Inc., Tulsa, has told Bolivia that it will cite a bilateral treaty protecting investment in a lawsuit challenging the country’s Hydrocarbons Act passed last May by Congress and signed by interim President Eduardo Rodriguez.

Vintage Petroleum Inc., Tulsa, has told Bolivia that it will cite a bilateral treaty protecting investment in a lawsuit challenging the country’s Hydrocarbons Act passed last May by Congress and signed by interim President Eduardo Rodriguez.

The bill raised levies on gas production at the wellhead to 50%, with 18% as a direct royalty and 32% as a nondeductible tax. Previously, companies paid about 38% in royalties and tax at the wellhead.

Repsol YPF SA has taken a stand against the tax, royalties, and regulatory reforms, saying planned investments of $850 million may be withdrawn and warning that the company is likely to seek legal redress on behalf of its shareholders.

Repsol YPF, Total SA, and British Gas have requested a period of negotiation through Jan. 8, 2006, under Bolivia’s treaties with Spain, France, and the UK, before resorting to international arbitration.

Vintage controls about 428 bcf of Bolivia’s natural gas reserves, both developed and undeveloped, as of yearend 2004, according to company reports.

Jaime Dunn, Bolivia’s minister of mines and hydrocarbons, said representatives of his ministry and other government officials are meeting with BG, Repsol YPF, and Total this month at their request. He added that the companies are seeking a 6-month period of negotiations as provided in the hydrocarbons law, after which they could file complaints with the International Center for Settlement of Investment Disputes, an arm of the World Bank.

The Bolivian government advised in July that it would negotiate with other foreign oil companies operating in the country to bring their contracts into alignment with the new hydrocarbons law.

Rodriguez signed the controversial tax bill after the resignation of former Bolivian President Carlos Mesa following weeks of street demonstrations in which protestors demanded nationalization of Bolivia’s oil industry (OGJ Online, July 6, 2005).