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Last Updated: Thursday, 4 May 2006, 04:32 GMT 05:32 UK
Chavez in Bolivia before gas meet
Chavez and Morales
Mr Chavez (left) and Mr Morales are close allies
Venezuelan President Hugo Chavez is in Bolivia ahead of talks with Argentina and Brazil over Bolivia's move to take control of the gas industry.

The decision by Bolivian leader Evo Morales, announced on Monday, has alarmed Argentina and Brazil, who both have a major stake in Bolivian gas.

But Mr Chavez - an ally of Mr Morales - said he congratulated his decision and hoped to "learn from Bolivia's wisdom".

Leaders from the four countries are to meet in Argentina later on Thursday.

The meeting was reportedly arranged after a conversation between Brazilian President Luiz Inacio Lula da Silva and his Argentine counterpart, Nestor Kirchner, on Tuesday.

Brazil is the biggest investor in Bolivian gas and also its biggest consumer, followed by Argentina.

Meanwhile, a one-day strike planned to protest at Mr Morales' decision in the eastern city of Santa Cruz has been called off.

'Risky move'

Mr Morales said on Monday that private energy companies must review contracts and sell their controlling stakes in his country's gas fields to his government.

A banner reading: "Nationalised: Property of the Bolivians" hangs from a gas installation at Carapari gas field in Tarija state, Bolivia
With good will, Morales will reach the agreements he needs to make with the foreign companies
Hugo Chavez
Venezuelan President

The move follows from his election campaign pledge to give poorer Bolivians, most of them indigenous people from the Andean highlands, a bigger share in the country's energy wealth.

The approach is backed Mr Chavez, seen as a mentor to Mr Morales, who negotiated similarly tough deals with global oil giants.

However, BBC Brazil correspondent Steve Kingstone says the Bolivian leader is nonetheless taking a risk.

Multi-national gas companies have invested more than 3bn in Bolivia and if they do not trust the government, they may take their business elsewhere.

'Deep concern'

Brazil's state-owned energy company, Petrobras, is the biggest investor in Bolivia's gas fields.

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

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

Our correspondent says the two presidents are friends and Brazilian leader Lula prides himself on his negotiating skills.

But, he says, 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 has expressed "deep concern" at the move.

The Spanish deputy prime minister said Mr Morales' actions could deter foreign investment in Bolivia.

Mr Morales has said the gas fields are "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.




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


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