Irish exploration company Pan Andean Resources insists that it can continue to operate in Bolivia following the surprise decision by the South American country to nationalise its oil and gas fields.
But the AIM-listed company's plans could depend on partnering the Venezuelan government, controlled by populist left-wing president Hugo Chávez, in a deal involving the effective expropriation of BP assets.
David Horgan, Pan Andean's managing director, said: "If we do a deal, we will have to buy out BP's interest."
The company, led by John Teeling, is linked to Petrel Resources, one of the few western exploration businesses active in Iraq.
Pan Andean's hopes of overcoming the threat of nationalisation, made by Bolivia's president Evo Morales, depend on the future of a $40 million (€31 million) joint venture gas project with BP in the country.
The company says that it has continued in active discussions with the La Paz government on the gas project following the announcement on the nationalisation plans earlier this month.
The project is based around developing the El Dorado field 40 kilometres from Santa Cruz, in the south of the country. Pan Andean plans to process the gas for sale in the local market.
Pan Andean owns 10 per cent of the El Dorado block. The rest is owned by Chaco, the former state-owned company that is part of BP.
Pan Andean, which is valued at £12 million, says that it is in discussions with the Venezuelan oil ministry to tap into a $100 million fund and possibly bring it in as a partner.
Pan Andean hopes the nationalisation will not, in effect, cover some small operators, particularly one that is based in an officially neutral, non-aligned country.
Company officials concede that in doing business with the Morales government, and exploiting the legal uncertainty, they may be encouraging other countries to take similar steps towards nationalisation.
However, Mr Horgan said: "We don't really care what precedents it sets. What the majors see as a problem, we see as an opportunity."
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