LA PAZ – Bolivia’s government has reached a deal with Pan American Energy over the 2009 expropriation of its controlling stake in natural gas firm Chaco, a move that prompted the Anglo-Argentine company to bring an arbitration claim against La Paz before the World Bank’s International Center for Settlement of Investment Disputes.

Attorney General Hector Arce told a press conference Thursday that the settlement was reached two days ago in a meeting between representatives of PAE and Bolivian government officials “after a long negotiation process.”

The final agreement will be signed within the next two months, Arce said, adding that as part of the deal the company will drop its arbitration case against Bolivia.

Pan American Energy, which owned a 51 percent stake in Chaco before the takeover, demanded in arbitration that Bolivia pay it just under $1.5 billion, which included compensation for the stake and other damages.

The arbitration case was the costliest that Bolivia had been facing, Arce said, without indicating the amount the government agreed to pay PAE.

The compensation is based on a valuation carried out by the Bolivian government and is “considerably less” than what the company had been demanding, the attorney general said.

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