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Bolivia is experiencing a transition in its energy policy as a result of ideas proposed by the new government, led by Evo Morales. In the short period since Morales became president he has announced major changes for the energy sector through the Hydrocarbons Ministry.

Executives of leading Bolivian oil companies are facing a claim that seeks to void the joint venture contracts executed with state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos. The contracts authorize oil and gas companies to explore certain areas and to exploit and commercialize the hydrocarbons extracted from those areas.

Congress has finally approved the new Hydrocarbons Law. The law designates certain activities to be of public interest and national use, including operation, transportation and storage and commercialization. However, further legislation is still needed in order to ease the uncertainty faced by the hydrocarbon industry.

The Bolivian Senate has again considered the controversial Hydrocarbon Law, which has divided the country in half and was a key reason behind the president's decision to submit his resignation to Congress. The law proposes excessive non-deductible taxes, and oil companies have threatened legal action if it is passed.

Changes to the Hydrocarbons Law are being considered as a result of structural changes in the country, as well as a series of state and regional demands for autonomy. If adopted, the changes would result in the state-owned hydrocarbons company playing a more active role and participating directly in all industry activities.

Argentine President Nestor Kirchner and Bolivian President Carlos Mesa have agreed to enter into a gas purchase agreement under which Bolivia will sell a certain amount of gas to Argentina. The sale was negotiated under unusual conditions, including a prohibition against the Argentine government reselling the gas to developing countries (Chile in particular).

If the findings of a forthcoming pre-feasibility study are positive, negotiations will be initiated to draw up a contract for the construction of a $3 million gas to liquid production plant. The project is set to reap many benefits for Bolivia.

Bolivia is enjoying a new-found popularity among countries that require natural resources. One of the reasons for this is the recent discovery of several gas reservoirs, the discovery of which was made possible only through investment in the capitalization process of the divisions of state owned petroleum company YPFB.

Plans are afoot for Bolivian gas to be exported to both Mexico and California. However, the project is proving to be controversial: sensitive diplomatic issues have arisen from the need to choose a port by which the gas will reach the Pacific Ocean.

Since its creation in 1997 as part of the Vice-Ministry of Energy and Hydrocarbons, the Environment Unit has liaised with key players in the hydrocarbons industry and conducted studies in order to incorporate international environmental standards for the industry in Bolivia.

GasOriente Boliviano (the owner of the Bolivian section of the Bolivia-Brazil pipeline) has measured carefully the pipeline's environmental impact and specialists are overseeing the reconstruction of the ecosystem that previously existed.

Agreements have been signed for the Bolivia-Brazil pipeline project. These agreements form the basis for transporting Bolivian gas from the Rio Grande to the Brazilian border. The Bolivian pipeline is operated by Gas Transboliviano SA, an Enron/Shell company.

The government has amended Article 93 of the Regulation of Transportation of Hydrocarbons through Pipelines. New tariffs have been established by calculating the minimum return for every type of pipeline in the country.

Bolivia now has an exclusive wholesale dealer for the marketing of gasoline and diesel oil produced in the country. Purchase/sale contracts will be entered into so that the internal market can be supplied with these products.

The procedure for obtaining a concession for the construction and operation of pipelines, stations and plants for the transportation of hydrocarbons is regulated by the Hudrocarbons Superintendency. Generally, transportation is regulated by the principle of free access so that everyone has the right to access contract transportation services.

The government has implemented a decree to reduce the domestic price of oil following public dissatisfaction with high prices.

Including: Exploration, Exploitation and Commercialization; Hydrocarbon Transportation and Natural Gas Distribution; Refining and Industrialization; Mandatory Easements