State-owned Yacimientos Petroliferos Fiscales Bolivianos agreed to assume the debts of Royal Dutch Shell and Britain’s Ashmore in nationalized natural-gas pipeline operator Transredes to avoid an arbitration process, YPFB’s chief said Tuesday.

Carlos Villegas told state radio that YPFB will pay Transredes’ $50 million tax bill as well as $120 million each to Shell and Ashmore for their combined 50 percent stake in Transredes.

In exchange, he said, the two companies agreed to drop the arbitration process they launched against President Evo Morales’ government.

The socialist government nationalized the Shell-Ashmore stake in Transredes via decree on May 1, 2008, but subsequent talks with the foreign firms failed to reach accord on appropriate compensation.

Morales then issued a second decree, provoking the demand for arbitration.

Under the fossil-fuel nationalization ordered by Morales in May 2006, YPFB, which owns Bolivia’s estimated 48 trillion cubic feet of natural gas and much smaller reserves of crude oil, has authority to participate in every phase of the oil industry.

About a dozen private companies, including Brazil’s Petrobras, Spain’s Repsol YPF, Britain’s BG Group plc and France’s Total, continue to operate in Bolivia through minority partnerships with YPFB. EFE

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