May 2008

Oiltanking Disappointed about Nationalization in Bolivia

As a consequence of the nationalization decrees of the Bolivian Government dated May 1 and 9, 2008, Oiltanking and the Graña y Montero Group are forced to hand over control over their shared subsidiary Compañía Logística de Hidrocarburos Boliviana (CLHB) to the Bolivian state oil company YPFB on May 9, 2008.

Oiltanking and Graña y Montero are very disappointed by these precipitous and drastic moves by the Bolivian government. Since acquiring CLHB through privatization in 2000, both shareholders had gone to great effort and expense to turn the 16 storage terminals and approx. 1,500 km of product pipelines into a safe, efficient and reliable provider of supply-chain services. International HSSE standards for security and environment measures were introduced and high investments made in the infrastructure. Furthermore, the new Bolivian colleagues had been trained with great success.

As at all worldwide sites, great care was taken to ensure that CLHB complies with Bolivian laws and the obligations imposed by the Privatization Act at all times.

Ever since the process to renationalize CLHB began in 2006, Oiltanking and Graña y Montero had engaged in open, accommodating and constructive negotiations with the Bolivian government, with the goal of arriving at an amicable solution that was acceptable for all sides. The shareholders had trusted that the Bolivian government would enter into negotiations to determine a fair purchase price for CLHB.