This excerpt taken from the PBR 6-K filed May 4, 2006.
Company position on recent events in Bolivia
(Rio de Janeiro, May 3, 2006). PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that, as a consequence of the Bolivian Republics Nationalization Decree 28701, itit will act to:
The Company also wishes to make public that the net book value of its Bolivian assets is US$ 365 million, controlled through its Dutch subsidiary, PIB BV. Petrobras proven oil and natural gas reserves, and its production in Bolivia represent only 3.7% and 2.4%, respectively of the Companys totals.
At a press conference, the Companys President, José Sérgio Gabrielli de Azevedo, together with Directors Almir Guilherme Barbassa (Finance and Investor Relations), Ildo Sauer (Gas and Energy), Nestor Cunat Cervero (International) and Paulo Roberto Costa (Downstream), announced that the Gas Supply Agreement (GSA), a contract which governs the sale of natural gas by YPFB (the Bolivian state oil company) to Petrobras in Brazil is unaffected by the Nationalization Decree and continues in full force and effect. This contract is governed by international law with the forum for settling eventual disputes being the courts of New York. The GSA provides for periodic meetings of the parties to the contract with the purpose of re-discussing the pricing of up to 30 million cubic meters/day of gas traded between the two countries. At this time, Petrobras has not received any request from YPFB for price readjustments. The Company wishes to place on record that it will not accept any price readjustments outside the parameters established in the relevant clauses to the GSA.
The delivery of gas under the GSA has never been threatened and at no time has Petrobras received any indication that such deliveries might be suspended. Among others, for technical reasons no disruption to gas supplies is contemplated, as the production of condensates, for processing in local refineries and subsequent supply to the Bolivian market, requires the off-take of the natural gas produced simultaneously.
The Nationalization Decree only affects the Companys activities inside Bolivia itself.and provides for a transitional 180-day period during which time:
Several legal features of the Decree remain unclear. For example, how Petrobras is to be compensated for the nationalization of the majority of the shares in its existing refineries, as prescribed under the Bolivian constitution, has yet to be determined. During the transitional period, Petrobras intends to explore all legal means at its disposal to protect its interests. On the international front, the Company is to examine the application of the Bolivia Netherlands bilateral treaty signed within the framework of the International Center for the Settlement of Investment Disputes, part of the World Bank Group, as Petrobras controls its assets in Bolivia through its PIB BV subsidiary with registered offices in the Netherlands.
Petrobras participation in the possible expansion of GASBOLs transport capacity, for which TBG had already requested public tender bids, is abandoned. Consequently, natural gas volumes to be acquired by Petrobras from YPFB are to remain at 30 million cubic meters until the termination of the GSA in 2019.
To counterbalance the loss of this additional natural gas volume, Petrobras is to begin studies immediately to examine the feasibility of building regasification unit(s) for processing imported LNG from the international marketplace.
Petrobras has been operating in Bolivia since October 1996 with the beginning of exploration activities in the San Alberto field and the start of construction work on GASBOL. Petrobras total investments in Bolivia in nominal terms amount to US$ 989 million, peaking in 2002 at an annual amount of US$ 218 million. Since then, investments declined to US$ 50 million and US$ 19 million in 2003 and 2004 respectively, stabilizing at this level in 2005. In August 2005, Petrobras activities in Bolivia accounted for 40% of the national production of oil and condensates and 57% of the countrys natural gas production. In 2005, Petrobras tax payments in Bolivia - US$ 536 million - represented 24% of the total taxes raised by the Bolivian government.
Petróleo Brasileiro S.A PETROBRAS
This document may contain forecasts that merely reflect the expectations of the Companys management. Such terms as anticipate, believe, expect, forecast, intend, plan, project, seek, should, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 4, 2006
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.