Brazilian energy company Petrobras is suspending future investment in Bolivia following its neighbour's decision to take state control of its gas industry.
Petrobras said the move would start with the scrapping of plans to expand a gas pipeline between the two nations.
Its announcement came ahead of an emergency regional summit to discuss Bolivia's move to renationalise.
Bolivian President Evo Morales will meet his counterparts from Argentina, Brazil and Venezuela on Thursday.
'Insuffient returns'
Mr Morales announced on Monday that his government was taking the country's gas industry into state hands.
The decision has cautioned consternation in Brazil and Argentina, whose energy firms - such as state-owned Petrobras - have major stakes in the Bolivian gas sector.
Petrobras boss Jose Sergio said the Bolivian move, which reduces foreign firms' production stakes to 18%, meant there would no longer be sufficient returns to justify increased investment.
As a result, he said the company was now looking towards imports of liquefied natural gas (LNG) from other countries to feed growing domestic Brazilian demand.
Brazil is currently Bolivia's biggest gas buyer.
Mr Morales has given foreign gas companies 180 days to comply with the nationalisation or else leave the country.
While Mr Morales is likely to face tough questions at Thursday's emergency meeting from Brazilian president Brazilian President Luis Inacio Lula da Silva, and his Argentine counterpart Nestor Kirchner, support will come from Venezuelan leader Hugo Chavez.
Following talks between Mr Morales and Mr Chavez in Bolivia on Wednesday, the Venezuelan president said he had come to offer his "congratulations and learn from Bolivia's wisdom".
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