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Last Updated: Wednesday, 3 May 2006, 02:01 GMT 03:01 UK
Crisis talks on Bolivia gas move
A banner reading: "Nationalised: Property of the Bolivians" hangs from a gas installation at Carapari gas field in Tarija state, Bolivia
Soldiers secured gas facilities, hanging triumphant banners
Bolivia is to hold talks with Brazil, Argentina and Venezuela on Thursday to discuss its move to extend state control over its natural gas assets.

Bolivian leader Evo Morales has said private energy companies must review contracts and sell their controlling stakes in energy to his government.

The move has alarmed Brazil and other key foreign investors in Bolivian gas.

With Brazil relying on Bolivia for half its gas, stakes will be high when the leaders meet, a BBC correspondent says.

The meeting was arranged after a conversation between Brazilian President Luis Inacio Lula da Silva and his Argentine counterpart, Nestor Kirchner, the Associated Press news agency reports.

Argentina is the second biggest consumer, after Brazil, of Bolivian natural gas.

Along with Presidents Lula, Kirchner and Morales, the Venezuelan leader Hugo Chavez - a major ally of Bolivia - will also attend the summit, which is to be held in Argentina.

'Holding line'

Brazil's cabinet and top energy officials held an emergency meeting earlier on Tuesday to assess the impact of the Bolivian move, announced a day earlier.

Evo Morales
The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources
Evo Morales
Bolivian President

Brazil is the biggest consumer of Bolivian gas and its state-owned energy company, Petrobras, is the biggest investor in Bolivia's gas fields.

A spokesman for Petrobras, which is also one of the largest foreign investors in any sector in Bolivia, called it an "unfriendly" action.

The Brazilian government said on Tuesday that it respected Bolivian sovereignty but added that it would negotiate firmly and calmly to preserve the interests of Petrobras.

It stressed the importance of international law and added that President Morales had assured Lula that the supply of Bolivian gas to Brazil would be maintained.

According to the BBC's Steve Kingstone in Sao Paulo, this has the ring of a holding line until the leaders meet face to face.

He says the two presidents are friends and Lula prides himself on his negotiating skills - but with Brazil's reliance on Bolivia for half its natural gas, the stakes are high, especially as Lula is seeking re-election later this year.

Spain's Repsol YPF is also a big player in Bolivia, and the Spanish government expressed "deep concern" at the move.

The Spanish Deputy Prime Minister said Mr Morales' actions could deter foreign investment in Bolivia.

'Less favourable terms'

Speaking at an oilfield in the south of the country on Monday, Bolivia's left-wing president, said: "The pillage of our natural resources by foreign companies is over."

About 100 soldiers earlier peacefully took control of the Palmasola refinery in the south-eastern city of Santa Cruz, reports said.

GAS DECREE
The state takes control of all gas fields
Companies have six months to renegotiate contracts or be expelled
They will be obliged to sell at least 51% of their holdings to the Bolivian government
The two largest gas fields - San Alberto and San Antonio - must give 82% of production to the state, up from 50%
The state will take 60% of production from other fields
Details of new contracts to be worked out on a case-by-case basis

The government said soldiers and engineers were sent to 56 locations around the country.

Mr Morales said the gas fields were "just the beginning, because tomorrow it will be the mines, the forest resources and the land".

The fate of Bolivia's gas reserves was at the heart of protests which saw two presidents thrown out of office.

Mr Morales' move is the fulfilment of an election promise to secure better benefits for impoverished ordinary Bolivians from the gas reserves - the second largest in the continent.

Hundreds of Bolivians celebrated the decree in the de facto capital, La Paz, on Monday.

Under the terms of Decree 28701, the Bolivian government has declared absolute control over the country's energy resources and radically altered the conditions of its relationship with the energy companies.

Royalty payments to the Bolivian government at the largest gas fields will now increase from 50% to 82%.

Companies have six months to negotiate new contracts with the Bolivian government. During that time, the Bolivian government says it will carry out audits of each company to determine how much it should pay for a stake of at least 51% in each.


BBC NEWS: VIDEO AND AUDIO
See one of the gas plants nationalised by Bolivia




SEE ALSO:
Q&A: Bolivia's gas takeover
03 May 06 |  Business
Bolivian leader seeks debt relief
03 Apr 06 |  Business
Country profile: Bolivia
19 Apr 06 |  Country profiles


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