Bolivia and Argentina on Monday agreed to build a new natural gas pipeline and a gas separation plant and planned to hold an international licensing round this December for the contract.

Bolivian Vice President Alvaro Garcia and Argentine Planning Minister Julio de Vido announced the project at a press conference after a meeting in the eastern Bolivian city of Santa Cruz de la Sierra.

The pipeline project is part of a broader plan to increase Bolivia's gas exports to Argentina to 27.7 million cubic meters a day (mcd) for 20 years starting in January, from 20 million mcd.

Some weeks ago, Argentine President Nestor Kirchner and his Bolivian counterpart Evo Morales agreed to raise the price of Bolivian gas exports to Argentina to US$5 per British thermal unit (BTU), from US$3.50 per BTU, until the end of this year. Bolivia also hopes to increase prices by a further 20 percent next year.

Garcia estimated the cost of the pipeline project at some US$1.2 billion and the plant costs at about US$250 million, which would be paid for completely by Argentina.

(Xinhua News Agency August 15, 2006)