Report on the Camisea Gas project

Report on the Camisea Gas project

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"The oligarchs and their mercenaries, animated by a will to power and unlimited greed, defend with picks and nails the privatization of the world"
"Every seven seconds, a child under the age of ten dies from direct or indirect effects of hunger; each victim of hunger is a murder" Jean Ziegler UN Special Rapporteur on the right to food.

Joseph Stiglitz "The Upset in Globalization" Mendicant ministers, with virtuous exceptions, almost never oppose the sale of state industries. On the contrary, "attending to the IMF's demands" they happily liquidate their electricity and water companies: "you could see how their eyes were opened to the possibility of a 10% commission, paid in Swiss accounts, for the simple fact of having lowered 'a few thousand million pesos in the sale price of public goods? (London Observer).

While pretending to wish the recovery of the Sea, singing the anthem and saluting the flag, GSL negotiated Tarijeño gas with the Chilean government.

Since entering the Government Palace in August 1993, Goni has worked hard to make the sale of gas from Tari to Chile viable. Parallel to the negotiation of the sale of 7 Tcf to Brazil, since 1993, it negotiated the sale of 5 Tcf to Chile. In the midst of these secret negotiations, based on the absolute assurance that Tarija had more than enough reserves to sustain these two projects, the reserves were reclassified, stating that Tarija had no "existing" gas reserves, YPFB was liquidated and taxes were lowered. ? over price at the wellhead- destined to TGN from 38 to 6%.

In 1994, Chile was consuming 0.05 Tcf / year and GSL proposed to deliver 0.05 Tcf / year! Bolivia signs new trade and cooperation agreements with Chile and Argentina (10/20/1994) Since late September, Bolivia has signed a series of new agreements with Chile; the same ones that will allow increasing technical cooperation between both countries. Likewise, the two nations are promoting negotiations on the construction of a new gas pipeline that will allow Bolivia to sell at least four million cubic meters of natural gas per day to its neighbor?

"Once BHP joined the joint venture, the three companies (ENAP, YPFB and BHP) accelerated their negotiations in an effort to complete the final details before the end of 1994. According to Bolivian officials, the two governments have agreed to complete all aspects related to the construction of the gas pipeline until November (1994), including final decisions regarding its exact location and a schedule for its construction. Most of the negotiations have already concluded, according to official versions. Bolivians, who indicate that the gas pipeline will depart from Tarija, a southern region of Bolivia, and will run along the border to the west until it crosses the Chilean region of Calama. From there, the gas pipeline will be divided into three branches that will connect the gas pipeline to the northern Chilean ports of Tocopilla, Mejillones and Antofagasta.

When, in 1996, the "National Need" to build a gas pipeline to Chile was ratified, through the Hydrocarbons Law, did Bolivia have everything, the legal bases, the institutional experience and the gas reserves required to generate a great national project? 1996, the state company, YPFB, had all the rights to explore and extract natural gas in Bolivia? Bolivia: Study of the development of the Natural Gas Market, World Bank, July 26, 2001

No. 1689 Hydrocarbons Law 30-Apr-1996

Article 2. Within 50 kilometers of national borders, foreigners may not acquire or possess real estate by any title, except in the case of national necessity declared by express law. Annex 1.- CORRIDORS OF NATIONAL NEED The following are the four-kilometer wide corridors of the export pipelines declared of national necessity according to Article 68: 1.- Sica Sica - Arica Pipeline. 2.- Gas Pipeline Project to the Republic of Chile.

Bolivia had abundant gas reserves under its control (reserves evaluated by the US Government and a series of consulting companies from that country) YPFB controlled everything and the Bolivians owned large deposits of natural gas that were of interest to Argentina. Brazil, Paraguay, Chile and Peru, but this source of wealth was alienated "In 1995, scientists discovered large deposits of gas in the North and Southwest of Bolivia" "A second project of The gas pipeline, from Tarija in the South to the North of Chile, is under discussion, but will probably not be executed. YPFB, ENAP (the Chilean oil company) and BHP, were interested in this project. Other gas pipeline projects are being considered towards Paraguay and Peru. "

U.S. Department of the Interior U.S. Geological Survey The Santa Cruz - Tarija Province of Central South America: Los Monos - Machreti (!) Petroleum System Open - File Report 99-50-C

After having allowed the systematic investigation of strategic gas reserves by the US Government, having hidden them to achieve the application of a 6% tax on 100% of the reserves committed to Brazil and Chile, allowing For each Tcf of natural gas, the transnationals leave the TGN a mere 42 million dollars (6% of 700) instead of 475 million dollars (38% of 1,250). Was it necessary to reduce the price at the wellhead? difference? 433 million dollars per Tcf and more than 20 billion dollars on the approximately 50 Tcf of gas from Tarije. Hence, the PACIFIC LNG Project was born?

The proofs of the infeasibility of this? Pretext-project ?, come next: Would you invest 6.450 million dollars without ensuring a market for your product?

Table 9. Thechnically Recoverable U.S. Natural Gas Resources as of January 1, 2002 (trillion Cubic Feet) (Technical survey carried out in February 2002)

Total 1,228.9

Ministry of Economic development

LNG Project: investments, Exports and income for the State
Investments in Bolivia
- Development of producing fields
- Investment US $ 1,100 million
- Transportation
- Bolivia 445 Km. Approx.
- Investment US $ 667.5 million
Diameter Volume
- Pipeline 36? 36 MMm3 / day
- Pipeline 18? 60,000 bpd
Investments in Peru or Chile
- Transportation
- Neighboring country 355 km approx.
- Investment US $ 532.5 million
- Liquefaction Plant
- Capacity 6.6 MM ton / year
- Investment US $ 2,000 million
- LNG tankers
- 8 boats
- Investment US $ 1,450 million
- Capacity greater than 135,000 m3 (60,000 ton)
- Regasification Plant
- Capacity 6.6 MM ton / year
- Investment US $ 700 million

You, would you risk 6.450 million dollars, competing with 21 similar projects?
and? .without having any place to deposit your product?
The EIA (US government), Sánchez de Lozada, Fernando Illanes and Jorge Berindoague ratified that there is no market for 0.365 Tcf / year of Pacific LNG gas in the US.

Does Bolivian gas for now have no assured market? For Bolivia, choosing the port through which gas will be exported to the United States is for now a "secondary" matter, President Sánchez de Lozada said on (11/22/2002). He reported that in the meetings he promoted he established that, for now, there is no market or
buyer? for gas, therefore, if there is not what is necessary to sell energy, Bolivia may not be choosing the port.

La Prensa - La Paz - Bolivia Edition of 01 Feb 2003 And the port? … Illanes pointed out:
The choice of the gas outlet port is no longer a priority, since? First we should make sure if there will be a project. It depends on the consortium having adequate financing and finding a market, which it still does not have? The new Minister of Mining and Hydrocarbons, Jorge Berindoague, is convinced that there was never a gas export project, but only intentions on the part of those interested in the business.

Pacific LNG partner indicated that it will not be possible to compete with Asian exporters Paul Jordan April, 2002 See
Note: Bolivia's LNG cannot compete with suppliers from the Asia Pacific region.

Bolivia: Natural Gas Market Development Study
Study for the development of the natural gas market (World Bank, 2002)
The US West Coast market is high risk and competition is fierce among vendors.
Most of the multiple projects are capable of supplying LNG to the US at $ 2.7 / MMBtu or less
This project would only be marginally beneficial if production costs exceeded $ 0.65 / MMBtu

Would you invest US $ 6.450 million to bring Bolivian gas to the Northern Hemisphere, towards a saturated market, crossing a neighboring country where your partners / shareholders are crying out for gas and they pay you 78% more making an investment 6 to 7 times less?

The true destination of Pacific LNG gas is Chile
For example, for Bolivia, there is an opportunity to shift sales from Argentina (for example to Chile).

The economist (former candidate for the Presidency of Chile and former Minister of Finance), Hernán Büchi foresees that in
In the future, Bolivian gas will not only be exported to the United States, but it will also be consumed in Chile.

Future of Energy Integration, Vice Ministry of Energy and Hydrocarbons of Bolivia, November 2001.

Natural Gas: Proved Reserves in South America.

Chile 4.41 TCF
Brazil 8.0 TCF
Peru 13.32 TCF
Argentina 25.7 TCF

Integration of the Gas Market in Latin America; Scenario towards 2015, Patrick Cayrade

Chile's ambitious thermoelectric plan with Margarita field gas (02/12/02) The Chilean company GasAtacama hopes to build new combined cycle thermal power plants that would be supplied with natural gas from Bolivia. The new thermal power plants could be perfectly fed with natural gas from Bolivia. This would represent lower operating costs for GasAtacama, since Bolivian gas is cheaper.
On the Day of the Sea, professionals will hold a peaceful march in rejection of the sale of gas Aguilar (College of Economists of Bolivia) pointed out that it is false that Chile's port alternative is the most economical possibility for the country and that the United States is the one that needs Bolivian gas; He stated that the business is required by Chile to strengthen the North of its territory and to increase the minimum reserves it has.
In brief Chile Requerira Gas Boliviano
Why, then, was it invented? the? Pacific LNG Project ??
1) Chile is presented as a simple transit territory and not as the destination of gas.
2) The profits of private companies increase proportionally to the difference between the real cost (gas pipeline to Chile) and the fictitious cost (gas pipeline + 2 terminals + ships).
3) The phenomenal magnitude of the alleged investment makes the participation of state entities (YPFB ,?) impossible and makes it possible to require a tax exemption, offering US and European banks and companies the opportunity to produce, transport and distribute gas and electricity , in Chile, Argentina, Brazil, Uruguay and Paraguay, with a cost? Bolivia? extremely low or just zero.

1) Chile appears to be a simple transit territory
25 years without diplomatic relations El Diario - 02.09.00 - Bolivian maritime issue is part of the bilateral agenda
Bolivia and Chile broke diplomatic relations in 1978, date from which they only have accredited Consuls in charge of handling immigration procedures for citizens of both neighboring nations.

Gas pipeline revived In one of its latest Investment Reports for Latin America, the international bank Morgan Stanley Dean Witter curiously revives a forgotten gas project in northern Chile. This old proposal, led at the time by YPFB, BHP Australia and Enap, was scrapped more than four years ago by its own shareholders. The reason given then was that Bolivia did not sell gas to Chile, as long as its Mediterranean problem was not solved, which to this day does not happen.

In 1995, the Bolivian Armed Forces rejected the Project for the sale of gas to Chile. Now that the Chilean market is not mentioned as a destination for gas, but rather a distant market, the fact that transnationals administer Bolivian gas in Chilean territories no longer generates the previous opposition.

2) Fictitious destination generates a price 44% lower than the price of Argentine gas for export? Thank you? to the remoteness of the supposed destination of the gas (California, USA and Mexico). At the wellhead, Argentine gas (excluding tariffs and surcharges): US $ 44.66 / thousand of m3 Equivalent to 44.66 / 35.31 = US $ 1,272 / thousand cubic feet /inf_sic_abr03d.pdf

3) Colonial-type tax system and without serious oversight mechanisms allows an extraordinary business to be made viable for transnationals.

Correo del Sur - Sucre, Friday, February 7, 2003
Tax exemption Minister Fernando Illanes said that the Pacific LNG consortium asked the government for tax exemption through a request form. The government authority said they are working hard on the issue and apparently the Pacific LNG consortium is seeking similar treatment to the companies that laid the export gas pipeline to Brazil, although it was an exceptional case.

Transnationals control the exploration, exploitation, transportation and distribution of gas in Bolivia and Argentina, as well as the generation and distribution of electricity in Chile, Argentina and Brazil. In this way, these companies will generate added value without having to pay anything to the Bolivians on the transformation of the raw material; raw material that they will have received paying the lowest taxes on the continent; Tax calculated on the lowest price?. of the continent.

EFFECTS of the? LAW 1689 + PACIFIC LNG ??
(tax and price reductions at the wellhead) on TGN's income from the sale of 7.3 Tcf of natural gas (Gross Value: US $ 9,125 million)
Income without rebates: 7.3 Tcf * 1.25 US $ / Mcf * 38% 3,467.5 million dollars
Wellhead revenue = 1.25 US $ / Mcf with tax reduction: 7.3 Tcf * 1.25 US $ / Mcf * 6% 547 million dollars
Wellhead revenue = 0.70 US $ / Mcf and TGN share reduction: 7.3 Tcf * 0.70 US $ / Mcf * 6% 306.6 million dollars.

The solution? Unite with the peoples of Argentina, Peru, Brazil and Chile, against the bloodsuckers (this is how Walter Guevarra described the transnationals?) In Argentina, they say: WE RECOVER YPF The Authentic Socialist Party, PSA, calls on the Argentine people to start the road of the national recovery through the recovery of the YPF company delivered at a vile price by the Menem government and which has been benefited with more concessions by the current government.

Blackmail, bribery, influence peddling
After Sapag's accusations, the powerful Spanish oil company Repsol-YPF warned yesterday about the possibility of canceling investment plans in Argentina due to "lack of legal certainty," according to an official source. "For the first time, Repsol YPF tells me that it will begin to analyze other possibilities, such as deposits in Bolivia and Trinidad and Tobago, because this process (the accusations in the Senate) does not give them legal or political security," said the governor of the province. from Neuquén, Jorge Sobisch, after a meeting with the head of Repsol-YPF, the Spanish Alfonso Cortina. Repsol-YPF had committed to investing in Loma de la Lata (Neuquén, southwest) the largest gas field in Latin America, an additional 8,000 million dollars, if in exchange the concession that already operates from 1992 until 2027 is extended until 2027. 2017.

His perseverance for the irregularities in the foreign exploitation of Chilean copper and its recovery, the end of the? Legal theft? in unpopulated areas, it is collected nationwide. Dozens have been the statements made by Senator Jorge Lavandero in Temuco, regarding the gigantic losses that the Chilean State has suffered from subordinating itself to international consortia in the exploitation of copper. Our main mining wealth, one day called "Chile's salary", is in the hands of international companies that have been a fiasco for national currencies. At more than one time, he said, "they have never paid taxes in the country, they have evaded taxes and in practice they have stolen money from all Chileans for decades."

Blackmail in Peru too? ? The Camisea contract provides that in the case of export, what the royalty will be will be analyzed ,? he said. Currently, the royalty that applies to both gas and liquids from Camisea for the domestic market is 37.24%. ? For export it should go down ,? said Moons. As a reference, he indicated that gas exported from Bolivia is paying 18% royalties.

Why is union with neighboring peoples urgent and indispensable? Because the World Bank, the Empire, the transnational companies and the ruling political parties will not allow legal certainty to be touched (laws 1689 and 1731). In addition, they have already tendered and studied the transportation of gas from Margarita to the Chilean coast, without consulting, taking advantage of the weakness of the Bolivian people, whose political representatives are partners and / or faithful servants of these transnationals.

La Prensa - La Paz - Bolivia Edition of March 16, 2003 From the National Congress, through the Civil Superintendency, political parties and analysts in oil matters, they questioned those who held the positions of Minister and Vice Minister of Energy and Hydrocarbons, President and Vice President YPFB executives, as well as technicians, have signed employment contracts with foreign oil companies that have heavy investments in Bolivia. For some this attitude is unethical, for others, there is influence peddling, although everyone agrees that this transfer of human resources directly affects the interests of the State, is there a drain on information? That weakens the country when it comes to controlling and negotiating with the oil companies. The contracts of former authorities in oil companies add up

Comrade Evo Morales: I have carefully read your call, I share and sympathize with your struggle, as well as the struggle of the Bolivian workers, both in the city and in the countryside. However, I cannot help but express my concern regarding how you refer to Chile and Chileans in general, and not to the Chilean bourgeoisie, agent of imperialism, in particular. I believe that this difference is very important, since the workers of the city and the countryside of Chile are victims of the same neoliberal policy to which our Bolivian brothers are exposed today. The liberation of Bolivian workers, as well as the liberation of any oppressed working people in Latin America or the world, will be an important step in the emancipation of workers worldwide. Long live the struggle of the Bolivian people, long live the struggle of the Chilean people, long live the struggle of the workers worldwide. Fraternally Nahuel Huenchuman

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