Announcement of Twenty-Three Million Two Hundred Fifty Thousand US Dollars Loan for Natural Gas Pipeline in Bolivia on July 2, 1969

\1 INTERNATIONAL BANK FOR ' RECONSTRUCTION AND DEVELOPMENT .1,818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXEC..UTIVE 3-6360 '. - - - - - - - - - - " ' . " " - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4 --l:.... Bank Press Release No. 69/55 Subject: $23,250,000 loan for natural July 2, 1969 gas pipeline in Bolivia A Wo~ld Bank loan equivalent to $23,250,000, announced today, will help to I,( finance construction of a pipeline system to deliver natural gas from Bolivia to Argentina •. The project represents an important step in the integration of the economies of the two countries to their mutual advantage. It will provide a new and substantial source of foreign exchange earnings for Bolivia an~ will help ~ meet Argentina I s large and growing requireme,nts for na-tural gas. The Bank loan will be made to Compania Yacibol Bogoc Transportadores (YABOG), a company owned e.qually by its two sponsors, Yacimi~ntos Petroliferos Fiscales .\ Bolivianos, the Bolivian Government oil corporation, and the Bolivian Gulf Oil Company, a subsidiary of Gulf Oil Corporation. It will be for a term of 21 years, including a 2-'."'year grace period, and will bear interest of 6.\%. The loan will be guaranteed by the Government of Bolivia and on a joint and several basis by YABOG~s two sponsors. YABOG' has been £1irmed as a non-profit company with nominal capital and it will borrow, on the credit of its sponsors, all the funds required for the con- struction of the pipeline. The Bank loan will finance approximately 50% of the ,cost, and a loan from the New York State CoDDDon Retirement Fund will finance the temainder. The project consists of the construction of a natural gas transmission system, comprising a 329-mile high-pressure trunk line, 24 inches in diameter, from Santa • Cruz in Bolivia to Yacuiba on the Argentine border, and about 100 miles of lateral /more  \\ " Hank P.R. No. 69/SS - Bolivia--Pipeline - 2 - lines to connect several gas fields with the trunk line. A sales agreement pro- • ·~ides for deliveries of gas over a 20-year period, beginning not later than August 1970, to Gas del Estado, the Argentine state gas monopoly. Gas del Estado will purchase the gas -- 141 million cubic feet per day for the first seven years and 159 million cubic feet for the following 13 years -- at a fixed price in United States dollars. Gas del Estado will build a short connection on the Argentine side of the border to link the new pipeline with its existing 1,080-mile pipeline from the Campo Duran oil field, where gas rese:?Ves are )?ecoming depleted, to Buenos A.ires.,· .. on tin ~xports for its foreign exchange ·Bolivia is still heavily d,ependent ' earnings. In 1966, Bolivia began exporting crude oil by pipeline through the pot't of Arica in Chile, and petroleun. now accounts for about 16% of Bolivia I s gross export earnings. While petroleum e~ports may increase, prospects are brightest for the export of natural gas _:which has recently been discovered in • significant quantities. After allowing for debt service and other foreign ex- change costs, gas exports through the pipeline can be expected to benefit the Ho1.ivian balance of payments to the extent of $6.S million a year. The total cost of the project is estimated at the equivalent of $46.5 mil- lion of which nearly three quarters will be in foreign exchange. The Bank loan will be used entirely for foreign exchange expenditures. After international competitive bidding, contracts have been let for the main supply of pipe with a German firm.which has subcontracted a sizable portion to an Argentine manufac- turer, and with a U.S. firm for the pipe laying and related construction work • - 0 - •