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31 August 2004
For Latin America, the past decade has been characterized by instability. Political crisis, economic depression and insurgent movements seem to have been a common denominator in many of the countries that comprise the South American continent. Argentina has been no exception; following the slow recuperation of its economy, the country now faces the imminent risk of an energy crisis which, if not resolved soon, could place its government in a ‘checkmate’ position before the syndicates and Congress opposition. In order to avoid such a situation, on April 21 2004 Argentinean President Nestor Kirchner and Bolivian President Carlos Mesa agreed to enter into a gas purchase agreement according to which Bolivia has agreed to sell a certain amount of gas to Argentina as of May 2004. The sale was negotiated under unusual conditions, which included prohibiting the Argentinean government from reselling the gas to developing countries (Chile in particular). This special condition can be traced back to 1879 when Chile locked Bolivia's only exit to the Pacific Ocean. Since then date, there have been no diplomatic relations between the two countries. Unfortunately, the gas sale failed to resolve Argentina’s energy crisis and so on July 22 2004 the Bolivian and Argentinean presidents prepared a letter of intentions according to which Bolivia will increase its sale of gas. In addition, it was agreed that efforts will be made to further to construction of the Northeastern Argentinean pipeline. Bolivia’s first democratic referendum on July 18 2004 resulted in the abrogation of the current Hydrocarbons Law. A new version will be submitted to Congress in due course, and is expected to affect conditions for gas exportation. In the meantime, gas sales have increased from 4 to 6.5 million cubic metres per day.
For further information on this topic please contact Riccardo Indacochea or Lorena Otero or Iver von Borries at Indacochea & Asociados, Abogados by telephone (+591 3 535 356) or by fax (+591 3 581 200) or by email (firstname.lastname@example.org or email@example.com or firstname.lastname@example.org).
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Ricardo Indacochea San Martin