South American leaders back Bolivia gas move

A video frame grab shows a banner hanging from the San Alberto de Tarija oil refinery which reads

A video frame grab shows a banner hanging from the San Alberto de Tarija oil refinery which reads

South American leaders have accepted Bolivia's decision to nationalise its natural gas sector as they hope to ease economic fears sparked by its radical petroleum industry takeover.

The leaders of Argentina, Brazil and Bolivia also agreed to open talks on new prices for Bolivia's natural gas at a summit in the Argentine city of Puerto Iguazo.

At the summit, Brazilian President Luiz Inacio Lula da Silva suggested that state-owned company Petroleo Brasileiro could reverse its decision, announced a day earlier, to freeze investment in Bolivia because of the nationalisation decree.

Mr Silva was meeting Bolivian President Evo Morales, Argentine President Nestor Kirchner and Venezuelan President Hugo Chavez in Puerto Iguazo on the border with Brazil.

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Upon his return to Bolivia, Mr 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 privatised in the 1990s until Mr Morales nationalised it this week and sent troops to guard foreign gas installations.

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

Mr 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 a majority stake in all operations.

Mr Morales, who won a landslide victory in December, has vowed to take back control of Bolivia's natural resources, including its natural gas reserves, mineral wealth and forests.

AP