South American leaders accept Bolivia's gas nationalization

South American leaders promised to respect Bolivia's decision to nationalize its natural gas sector and agreed to negotiate gas prices, hoping to diffuse a regional crisis sparked by the Andean nation's radical petroleum industry takeover.

Photo: South American leaders accept Bolivia's gas nationalization

At Thursday's summit in the Argentine city of Puerto Iguazo, Brazilian President Luiz Inacio Lula da Silva suggested that state-owned company Petroleo Brasileiro SA could reverse its decision, announced a day earlier, to freeze investment in Bolivia because of the nationalization decree.

"As a company, it will always invest wherever it sees a chance to obtain a return for its investments," Silva said after meeting with Bolivian President Evo Morales, Argentine President Nestor Kircher and Venezuelan President Hugo Chavez in this city along the border with Brazil.

Upon his return to Bolivia, Morales told reporters the leaders "expressed their great solidarity and said they would keep investing."

Brazil is the largest consumer of Bolivian gas and Petrobras is among the biggest producers in Bolivia, where the industry was privatized in the 1990s until Morales nationalized it Monday and sent troops to guard foreign gas installations.

Brazil and Argentina, another consumer of Bolivian natural gas, fear that if Morales hikes prices it could adversely effect their economies. The nations use Bolivian gas for power generation, cooking and to fuel cars.

Morales has threatened to evict all foreign oil companies if they don't sign contracts within six months surrendering control of the entire chain of natural gas production and giving Bolivia's cash-strapped state oil company, Yacimientos Petroliferos Fiscales Bolivianos, a majority stake in all operations.

After meeting for more than three hours, the four leaders issued a statement of respect for Bolivia's right to make sovereign decisions about its natural resources.

Silva said the leaders also agreed that differences over the prices Argentina and Brazil pay to Bolivia for natural gas and foreign participation in Bolivian production "would be discussed bilaterally between the Bolivian and Brazilian governments and between Petrobras and YPFB," reports the AP.

I.L.