BOLIVIAN AND VENEZUELAN OIL COMPANIES PLAN SYMBOLIC PARTNERSHIP

Código Fecha Clasificación Origen
07LAPAZ1347 15 May 2007 Secreto Embassy La Paz

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P 151906Z MAY 07
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 3586
INFO RUEHAC/AMEMBASSY ASUNCION 6775
RUEHBO/AMEMBASSY BOGOTA 4107
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

S E C R E T LA PAZ 001347

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 05/15/2017
TAGS: ECON, EINV, ENRG, EPET, PREL, IR, VE, BL
SUBJECT: BOLIVIAN AND VENEZUELAN OIL COMPANIES PLAN
SYMBOLIC PARTNERSHIP

REF: CARACAS 741

Classified By: Ecopol Counselor Andrew Erickson for reasons 1.4 (b), (c
), and (e).


Summary


1. (S) The GOB issued a decree on May 13 enabling state oil
company YPFB to form partnerships to explore 21 areas for
natural gas and oil. Following the decree issuance, Bolivian
officials announced that YPFB is discussing the formation of
a joint exploration company with Venezuela’s PDVSA. Reftel
reporting indicates PDVSA is strapped for cash. The
Venezuelan oil company has minimal experience in the natural
gas business, while past exploration has shown that Bolivia
has little oil. Thus, we assess this alliance to be more an
exercise in political theatrics than in economic ambition.
However, the PDVSA partnership could open the back door to
Iranian investment in Bolivia’s gas industry. End summary.


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GOB Issues Decree Granting YPFB Exploration Rights


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2. (U) The GOB issued decree 29130 on May 13 granting
Bolivian state oil company YPFB the right to form
partnerships with other state-owned or private companies to
explore and develop 21 areas for natural gas and oil
production. Hydrocarbons Minister Villegas reportedly
explained that although partnerships could be formed with
state or private companies, priority would be given to
companies from countries with which Bolivia has energy
agreements approved by the congress, such as with Venezuela.


YPFB Plans to Partner with Venezuela’s PDVSA


3. (C) Following the decree issuance, Bolivian officials
announced that Bolivia’s state oil company YPFB and
Venezuelan state company PDVSA are discussing the formation
of a joint exploration company to search for untapped gas and
oil reserves in Bolivia. YPFB would have majority ownership
of the company, which would take advantage of the 21 areas of
exploration assigned to YPFB. YPFB is also feeling out a
potential partnership with Russian company Gazprom.


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Comment: Iran — Potential Gas Exploration Partner?


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4. (S) Reftel reporting indicates that PDVSA is strapped for
cash. The Venezuelan oil company has minimal experience in
the natural gas business, while past exploration has shown
that Bolivia has little oil. Thus, we assess this alliance
to be more an exercise in political theatrics than in
economic ambition. However, Iran has demonstrated interest
in gaining a foothold in Bolivia for political reasons, and
gas exploration, in which Iran has expertise, could provide
an opening for the Iranians. Indeed, Vice President Garcia
Linera told the Ambassador May 14 that, although "political
relations" with Iran remain out of the question, "economic
relations" would continue to grow (septel). End comment.
GOLDBERG