Bolivia to pay Ashmore for nationalized assets
October 17, 2008 - Reuters

LA PAZ, Oct 17 (Reuters) - Bolivia said on Friday it would compensate Ashmore Energy International (ASHM.L: Quote, Profile, Research, Stock Buzz) for its 25 percent stake in natural gas pipeline company Transredes, nationalized in June, but did not say what amount would be paid.

Leftist President Evo Morales nationalized Transredes, the largest pipeline company in Bolivia, after failing to reach an agreement over a share transfer with Ashmore and Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), which each had 25 percent of the firm.

Government officials did not say how much the Ashmore deal was worth, but Shell agreed to transfer its 25 percent stake to Bolivia last month for $120 million.

"With the signing of this document ... we have 97.4 percent of Transredes shares," Energy Minister Saul Avalos said during the signing ceremony with an Ashmore executive in La Paz.

Ashmore had threatened to take Bolivia to international arbitration, demanding some $500 million for its stake in Transredes, Nationalizations Minister Hector Arce said during the ceremony.

Transredes controls pipelines that supply the domestic market as well as neighboring Brazil and Argentina, where the bulk of the country's natural gas production is exported.

The state takeover of Transredes is part of Morales' plan to exercise greater control over the country's natural gas reserves, the second-largest in South America after Venezuela.

Morales nationalized the energy industry in May 2006 in an effort to increase state revenue.

After months of negotiations, all the energy companies with investments in Bolivia agreed to pay more taxes and keep operating in the poor South American country under the government's new rules.

(Reporting by Eduardo Garcia; Editing by Clarence Fernandez)