The policy for US$ 180 million covers all damage risks to the plant, equipment, inventory as well as any possible damages to third parties or their properties, said Petrobras.
Bolivian Energy Minister Carlos Villegas said the plants have a processing capacity of 40.000 barrels per day which is equivalent to 100% domestic demand for special and premium gasoline plus 70% of diesel.
Petrobras acquired the refineries in 1994 for US$ 104 million when Bolivia was involved in a privatization spree and opening the exploitation of natural resources to foreign capital.
Under current president Evo Morales the policy has reversed 180 degrees and the Bolivian government through its oil company is taking back the refineries and nationalizing gas and oil reserves.
In related news Petrobras said it would not be paying a fine imposed by the Bolivian government for alleged irregularities during past oil exports.
Bolivia's government has started legal proceedings against the company that could result in a fine of up to US$ 239 million, Bolivian newspapers said last week.
"We haven't been notified of the fine yet. We only know about it from the press, and we won't pay it," the Petrobras press official said.
Last year, Bolivia accused Spanish-Argentine energy company Repsol-YPF and Petrobras of illegally exporting hydrocarbons.
According to the newspaper reports, Bolivia accuses Petrobras' refining unit of having exported oil worth about US$ 188 million in 2004 and 2005 without notifying a government anti-drug unit. Under Bolivian anti-drug legislation, oil exports have to be reported to the anti-drug unit in order to ensure they won't end up in the hand of drug traffickers.
However Petrobras alleges the legislation wasn't in effect yet at the time of the supposed irregular exports, Petrobras said.
Patagonia Exploration
The Patagonian province of Santa Cruz and Petrobras signed an agreement for the exploration of two gas basins in the extreme south of Argentina, plus the possibility of further concessions to another foreign company.
The agreement establishes an investment of US$ 400 million in the next seven years and the concession of two further deposits to Panamerican Energy.
Basically it means expanding the current concession in Cerro Dragon, north of Santa Cruz, identified as Koluel Kaike and Piedra Clavada, which Panamerican Energy was awarded from 1992 to 2017.
Since January 2007, oil areas under the Argentine Hydrocarbons bill belong to the provinces and therefore Panamerican Energy requested the provincial government a ten year extension of the license.
Argentina's Hydrocarbons bill states that oil contracts can be extended for ten years "and in this precise case the company is requesting an extension until 2027," said Alessandro Perrone, Santa Cruz Energy Secretary.
According to Perrone Panamerican Energy has also offered to increase royalties an additional 3%. The bill establishes 12% of total production and oil and gas traded must go to provincial coffers.
Panamerican Energy is also interested in off shore exploration in the San Jorge gulf, an area Santa Cruz shares with Chubut province. Last May Chubut agreed with Panamerican Energy to explore in the area to its own "total risk" and if oil or gas is found, the company must associate with the provincial government.
Santa Cruz is looking forward to reach a similar agreement with the company. Apparently the issue will be considered by Santa Cruz province governor Daniel Peralta during his visit to meet with Argentine president Nestor Kirchner in Buenos Aires.
Panamerican Energy proposal was made official last September.
Mercopress