Identifier
Created
Classification
Origin
06LAPAZ2056
2006-07-31 20:53:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
Cable title:  

HYDROCARBONS REGULATOR STANDS FIRM AGAINST GOB

Tags:  ECON EINV ENRG EPET BL 
pdf how-to read a cable
VZCZCXYZ0004
PP RUEHWEB

DE RUEHLP #2056 2122053
ZNR UUUUU ZZH
P 312053Z JUL 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 0096
INFO RUEHAC/AMEMBASSY ASUNCION 6020
RUEHBO/AMEMBASSY BOGOTA 3338
RUEHBR/AMEMBASSY BRASILIA 7189
RUEHBU/AMEMBASSY BUENOS AIRES 4452
RUEHCV/AMEMBASSY CARACAS 1727
RUEHPE/AMEMBASSY LIMA 1742
RUEHMN/AMEMBASSY MONTEVIDEO 3940
RUEHQT/AMEMBASSY QUITO 4358
RUEHSG/AMEMBASSY SANTIAGO 8920
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 002056 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: HYDROCARBONS REGULATOR STANDS FIRM AGAINST GOB

REF: LA PAZ 1842

UNCLAS LA PAZ 002056

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: ECON EINV ENRG EPET BL
SUBJECT: HYDROCARBONS REGULATOR STANDS FIRM AGAINST GOB

REF: LA PAZ 1842


1. (SBU) Summary: Bolivia's hydrocarbons regulator has
accused Bolivia's state oil company, YPFB, of entering into
contracts that are against state interests -- charges
ironically similar to those of the GOB against Enron and
former President Gonzalo Sanchez de Lozada. The GOB
reportedly tried to pressure the regulator into retracting
its resolution, but the regulator ratified its decision and
publicly protested the GOB's pressure tactics. The
Hydrocarbons Minister has delegated the case to the Public
Ministry for investigation. End summary.


2. (U) On July 21, the independent hydrocarbons regulator
denied a permit to Iberoamerica Trading for the export of
2,000 barrels per day of crude oil to Univen Petroquimica in
Brazil. Iberoamerica had entered into a contract with
Bolivia's state oil company, YPFB, to purchase crude oil that
would have been sold to Univen at below market rates. In
exchange, Univen would have refined the crude oil and sold
the extracted diesel to YPFB at below market rates. However,
based on the regulator's analysis, Bolivia would have lost
several million dollars on the deal. Thus, the regulator
denied the permit as contrary to national interests.
Ironically, these charges are similar to those made by the
GOB against Enron and former President Gonzalo Sanchez de
Lozada (reftel).


3. (U) On July 26, the President of YPFB and the Minister of
Hydrocarbons convened a press conference and stated that the
regulator had mis-calculated. On the 27th, the regulator
reaffirmed its decision and told the press the GOB had tried
to pressure it into admitting that it had erred. Despite the
pressures, the regulator stuck to its guns and responded that
it would not change its determination based on intimidation;
however, it explained that Iberoamerica Trading was free to
appeal its decision within the regulatory system in accord
with established procedures. (Note: According to the 1994
regulatory law, appeals against sector regulator decisions go
first to the sector regulator, then to the general regulator,
then finally to the Supreme Court. End note.) The
Hydrocarbons Minister has turned the case over to the public
prosecutor for investigation. Opposition leaders are calling
for the resignation of YPFB President Jorge Alvarado.


4. (SBU) Comment: The tables are turned as the GOB is
accused of signing hydrocarbons contracts that are harmful to
the state. Faced with such accusations, the GOB resorted to
pressuring the independent regulator, which the government
had already vowed to eliminate in its national development
plan. However, to the GOB's credit, forced to chose between
its stated goal of combating corruption and protecting its
brainchild -- a revamped YPFB -- it decided to investigate
the corruption accusations against the state oil company. On
the other hand, industry contacts worry that the
investigation may be more of a show the government employs to
save face than an impartial fact-finding process. End
comment.
GREENLEE