South Americans reach energy deal

South American leaders will want to guarantee cheap gas supplies

Argentina and Brazil have accepted Bolivia's moves to take state control of its gas industry but want talks on future prices and foreign involvement.

The deal was reached at an energy summit which also included Venezuela.

Earlier this week President Evo Morales took control of Bolivia's natural gas industry and told foreign firms to leave if they did not comply.

Brazil and Argentina rely on cheap gas imports from Bolivia and fear that nationalisation could push prices up.

Staying or going?

"The important thing is that gas supplies for the countries needing them have been guaranteed and that prices will be discussed in the most democratic form possible between all parties involved," Brazilian President Luiz Inacio Lula da Silva said following the meeting.

Correspondents say that while Mr Morales probably faced some stiff arguments from Argentine President Nestor Kirchner and his Brazilian counterpart President Lula, he was likely to have been supported by Venezuela's Hugo Chavez.

Venezuela has South America's largest reserves of oil and gas, and it has pledged to help Bolivia in the nationalisation of its own energy industry.

Bolivian troops are now guarding Petrobras properties

The Bolivian government has said it will start renegotiating energy contracts with all foreign companies from next week, giving them 180 days reach agreement, or face eviction.

They will be asked to hand over majority control of all Bolivian operations to the country's state oil firm, Yacimientos Petroliferos Fiscales Bolivianos.

State-owned Brazilian energy firm Petrobras, the largest foreign investor in Bolivian energy, had said it would cancel further investments, but President Lula said this decision could be reversed after more negotiations.

Spanish giant Repsol, which has invested more than 1bn euros in Bolivia, said it plans to remain in the country and co-operate with Mr Morales' government.