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Last Updated: Thursday, 11 May 2006, 14:12 GMT 15:12 UK
Bolivia 'won't pay compensation'
Bolivian guard outside Petrobras' HQ in Santa Cruz de la Sierra
Bolivia wants to use its energy revenues to finance national growth
Bolivia's President Evo Morales has said that foreign energy firms should not expect compensation for assets that are now under state control.

His comments seem to contradict those from the head of the state-owned energy firm, who said earlier he believed Brazil's Petrobras should be paid.

The confusion has arisen after Bolivia unveiled plans to take greater control of its vast natural gas fields.

The move has been criticised by companies and governments.

No case to answer

Mr Morales was speaking in Vienna at a summit of Latin American and European leaders.

He explained that foreign firms would be allowed to recover their investment in Boliva and some earnings, but that they would not be compensated because they could not own the country's natural resources.

"If we were to expropriate their assets, there could be talk of compensation," he said in Vienna. "But that's not the case."

Referring to Petrobras, the Brazilian company that is the biggest investor in Bolivia's energy industry, Mr Morales said the firm had been acting in an illegal manner.

Petrobras has spent more than $1bn in the country and controls 45% of its gas production. Brazil is the largest importer of Bolivian gas.

The two sides had met at a ministerial level on Wednesday and emerged saying they would work together to renegotiate contracts and implement plans to raise gas prices.

Before the meeting, Jorge Alvarado, the head of Bolivia's state energy firm Yacimientos Petroliferos Fiscales Bolivianos (YPFB), said that Petrobras needed compensation because its assets had been nationalised, not seized.

'The people's gas'

Earlier this month, Bolivian leader Evo Morales said private energy firms must review their contracts and sell controlling stakes in energy companies.

Following the announcement, Bolivia took control of two Petrobras refineries, sparking complaints.

Brazil has been holding talks with Bolivia to discuss the situation.

Under the terms of the nationalisation, foreign energy firms are required to agree new contracts with the state-run firm YPFB within 180 days.

Should they fail to do so, they would have to pull out of the country.

While discussions are taking place, Bolivia will keep up to 82% of the firms' revenues, allowing them just the remaining 18%.

In all, about 20 foreign companies are affected, including BP, British Gas, ExxonMobil, Total, and Repsol-YPF.


SEE ALSO:
South Americans reach energy deal
04 May 06 |  Business
Petrobras scraps Bolivia project
04 May 06 |  Business
Chavez in Bolivia before gas meet
04 May 06 |  Americas
Q&A: Bolivia's gas takeover
03 May 06 |  Business
Crisis talks on Bolivia gas move
03 May 06 |  Americas


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