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Sat, May 06, 2006 - Page 10 News List

Latin leaders back Evo's gas strategy

PUBLIC BACKING The presidents of Brazil and Argentina endorsed Bolivia's move to privatize its gas reserves but said that negotiations were needed over future development


The leaders of South America's three largest economies endorsed Bolivia's right to nationalize its natural gas, but signaled negotiations lay ahead on future gas supplies and energy investments.

Presidents Luiz Inacio Lula da Silva of Brazil and Nestor Kirchner of Argentina, Bolivia's biggest natural gas consumers who fear price increases, joined in publicly backing Bolivian President Evo Morales on Thursday at a summit convened to defuse a crisis over the issue.

Venezuela's socialist President Hugo Chavez, a close ally of Morales as the leader of South America's third-largest economy, called the closing of ranks behind Bolivia "a blow" to US-backed "imperialist" designs.

Chavez acknowledged the tensions raised by Morales' nationalization gamble but praised the fellow leaders of Argentina and Brazil who affirmed Bolivia's "sovereign right" to control its gas reserves, the second-largest in South American after Venezuela.

Morales arrived in Puerto Iguazu, Argentina with Chavez after declaring Bolivia was now seeking "partners, not owners" to tap Bolivia's natural resources, raising fears he could drive foreign energy companies from his country.

With soldiers posted at 56 gas installations around Bolivia after Morales issued his decree on Monday, critics saw his move as a spinoff of the more radical socialist policies espoused by Chavez.

After the four presidents met for three hours in this Argentine border city near Brazil, they held a joint news conference backing Bolivia but pointing to a series of bilateral negotiations ahead.

Chavez also publicly rejected any suggestion that Morales privately sought support for his decision from Venezuela or Cuba, the two most avowedly anti-US nations in Latin America.

Venezuela, meanwhile, pledged to help Bolivia's energy transition.

Rafael Ramirez, the president of Petroleos de Venezuela SA, said a natural gas extraction plant will be built in the Andean country. He did not elaborate on the cost.

He also said Venezuela would help Bolivia in "the certification, exploration and exploitation of oil and gas" reserves, a deal to be formalized by Chavez when he visits Bolivia on May 18.

Chavez was expected to visit a Bolivian gasfield to advance a "strategic" alliance between PDVSA and Bolivia's state oil company Yacimientos Petroliferos Fiscales Bolivianos, or YPFB, a Venezuelan statement said.

The summit came a day after Brazil's state-owned petroleum company summarily announced it would suspend all new petroleum investment in Bolivia, where it has spent US$1.6 billion over the past decade to boost production.

But Silva suggested that Petrobras could reverse course after negotiations.

"As a company, it will always invest wherever it sees a chance to obtain a return for its investments," Silva said.

Brazil is the largest consumer of Bolivian gas, and Petroleo Brasileiro SA is among the biggest producers in Bolivia, whose national industry was privatized in the 1990s.

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

"The important thing is that gas supplies for countries needing them have been guaranteed and that prices will be discussed in the most democratic form possible," Silva added.

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