Bolivia tries to defuse concerns over nationalization move

LA PAZ (AFP) - Bolivian President Evo Morales tried to reassure foreign oil companies and regional governments about his decision to nationalize the natural gas sector as Brazilian energy giant Petrobras said it was suspending investments in the country.

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Morales was pushed to placate international concerns after sparking an avalanche of protests with his decree Monday.

Venezuelan President Hugo Chavez, a staunch ally of Morales and fellow leftist, arrived in La Paz late Wednesday for talks ahead of a four-country South American summit planned in Argentina Thursday to discuss Bolivia's move.

"We support Bolivia which aims in the same direction that we have pursued," Chavez said.

But Morales, under pressure to defuse concerns from regional states, declared that the supply of Bolivian natural gas to Argentina and Brazil would continue uninterrupted.

On Telesur television he reiterated earlier declarations that the nationalization would not involve "any confiscation or expropriation of oil company assets".

Morales, in a separate interview with CNN, explained the nationalization as a "sovereign decision" that had nothing to do with Chavez, who has also moved forcefully to get better deals with foreign oil companies while expressing anti-imperialist sentiments.

But tensions remained high as Petrobras announced Wednesday it was suspending investments in Bolivia 48 hours after Morales sent troops to occupy oil and gas fields to enforce the nationalization decree.

Petrobras chairman Sergio Gabrielli also said the company would resist any effort by Bolivia to impose higher prices on gas exported to Brazil.

"We are suspending any possibility of new investment in Bolivia," Gabrielli said.

The nationalization crisis will be the focus of talks between Morales, Chavez, Brazilian President Luiz Inacio Lula da Silva and Argentina's Nestor Kirchner in Puerto Iguazu, Argentina.

Some 26 international energy firms including Petrobras, Spain's Repsol YPF, Total of France, British Gas and Exxon of the United States are affected by the nationalization, which Morales promised to carry out before being elected last December.

The nationalization aims at bringing more profits from the energy industry to the poorest nation in South America. But foreign investors expressed concern about whether their rights and contracts would be upheld.

Under the decree issued on May 1, foreign companies have up to 180 days to renegotiate their contracts with the Bolivian national oil company YPFB. During the transition period, 82 percent of profits will go to the Bolivian state and 18 percent to the corporations.

Morales rejected suspicions that fellow leftist-nationalist leaders Chavez and Fidel Castro of Cuba advised him on the nationalization.

"The presidents of Cuba and Venezuela knew nothing, absolutely nothing. It was a soveriegn decision," Morales insisted.

Chavez, who is concerned about the impact of La Paz's move on his plan for a massive gas pipeline across the entire South American continent, said that "the decision has generated concerns in some parts of the world."

However, he added, "I am sure that Evo knows what he is doing."

The Bolivian Chamber of Hydrocarbons, which comprises the foreign oil and gas companies operating in the country, announced that they were willing to take a main role in discussions with the government.

The nationalization decree "changes in a unilateral, negative and substantial manner the conditions for the companies," the chamber said.

The measure "does not take into account judicial stability, the promotion of investments, and social and economic development," the chamber said.

Spain's Foreign Minister Miguel Angel Moratinos told Morales by telephone that they would be sending a delegation to Bolivia within "a few days" to analyze the situation.

Spain, whose Repsol has a major stake in the oil sector, warned that the measure could have consequences on bilateral relations, and Prime Minister Jose Luis Rodriguez Zapatero made it clear it might affect the amount of aid Spain gives the impoverished South American nation.

The European Union also expressed concern, calling for La Paz to construct a "durable cooperation" with foreign oil companies.