Gazprom, Total Agree to Develop Gas Fields in Bolivia

By Lucian Kim and Torrey Clark

Sept. 19 (Bloomberg) -- OAO Gazprom agreed to explore for natural gas in Bolivia with France's Total SA as Russia strives to regain influence in Latin America.

The two companies may spend as much as $4.5 billion developing deposits with Bolivia's national energy producer YPF Bolivianos, Russian state broadcaster Vesti-24 reported today.

Russia, which lost its global influence after the fall of the Soviet Union, is keen to reestablish itself as an energy superpower. A high-ranking Russian delegation visited Cuba, Venezuela and Nicaragua earlier this week in an effort to shore up allies opposed to U.S. dominance in the western hemisphere.

``This is primarily about Russia's ambition to be the dominant force in global gas,'' said Chris Weafer, chief strategist at UralSib Financial Corp. ``It can also be seen as a Kremlin reaction to what it regards as U.S. interference in its `backyard.'''

The U.S. is pushing former Soviet republics such as Kazakhstan, Azerbaijan and Turkmenistan to seek energy export routes bypassing Russia, while supporting the aspirations of Ukraine and Georgia to join the North Atlantic Treaty Organization.

Joint Venture

The Bolivian accord, signed in La Paz yesterday, is ``one more step toward forming a joint venture,'' state-run Gazprom said in an e-mailed statement. Bolivia has the second-largest gas reserves in South America after Venezuela, Russia's closest ally in the region.

The agreement is for the exploration of the Azero block in the Andes foothills in southeastern Bolivia, next to the Ipati and Aquio blocks where Total found natural gas in 2004, the French company said in a statement.

The deal shows Total's ``commitment to working with national oil companies,'' the statement said. Company spokesman Kevin Church declined to say how much investment the project will require or Total's contribution.

Gazprom, which is also seeking projects beyond Eurasia in North America and Africa, has already signed a number of memoranda with Bolivia. Total, which has been working in the country since 1996, is a minority partner in Gazprom's Arctic Shtokman development, which holds enough reserves to meet world gas demand for more than a year.

Presidential Talks

YPF Bolivianos will own 51 percent of the planned joint venture, with Total and Gazprom holding equal stakes of 24.5 percent, Vesti-24 reported. The deal was signed by Gazprom Deputy Chief Executive Officer Alexander Medvedev and YPF Bolivianos chief Santos Ramirez following talks with Bolivian President Evo Morales.

Venezuelan President Hugo Chavez, who last week welcomed two Russian Tu-160 bombers for training exercises, expelled the U.S. ambassador on Sept. 12 in a show of solidarity with Morales. Two days earlier, Morales ejected the top American diplomat in Bolivia, accusing him of meddling in domestic politics.

The Bolivian government has since announced it will turn to Russia to replace U.S. funding for its anti-narcotics program.

To contact the reporters on this story: Lucian Kim in Moscow at lkim3@bloomberg.net; Torrey Clark in Moscow at tclark8@bloomberg.netTara Patel in Paris at tpatel2@bloomberg.net