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Bolivia-Argentina-Brazil Summit Ends in Smiles Despite End of Cheap Gas

The leaders of Argentina and Brazil have accepted Bolivia’s oil and gas industry nationalization industry and have agreed to "fair and democratic" talks on future prices and foreign involvement.

The deal was reached at an energy summit in Puerto Iguazú, next to the shared Argentine/Brazil Iguazú falls and also included President Hugo Chavez from Venezuela.

Last Monday, May 1st, President Evo Morales took control of Bolivia’s energy industry including natural gas resources and told foreign corporations they will have to comply with new conditions or leave if they are not satisfied.

Brazil and Argentina, which rely heavily on cheap gas imports from Bolivia fear that nationalization could push prices up distorting economic basics.

"The important thing is that gas supplies for the countries needing them have been guaranteed and that prices will be discussed in the most democratic form possible between all parties involved," Brazilian President Luiz Inácio Lula da Silva said following the meeting.

In spite of President Morales repeated warnings of "historic" changes regarding his country’s resources and commitment to honor campaign promises, last Monday’s decision to take over Bolivia’s energy industry apparently surprised Argentina and Brazil.

The urgently convened summit begun with stiff faces but after several hours’ discussions ended with a conciliatory tone emphasizing on Venezuela’s Pharaonic project of a pipeline crisscrossing South America to provide cheap gas to the whole continent; a project which involves almost US$ 20 billions and with no finishing date in the horizon.

Venezuela’s Hugo Chavez has South America’s largest reserves of oil and gas, and has pledged to help Bolivia in the nationalization of its own energy industry.

The Bolivian government has said it will start renegotiating energy contracts with all foreign companies from next week with a 180 days deadline to reach an agreement or face eviction. They will be asked to hand over majority control of all Bolivian operations to the country’s state oil firm, Yacimientos Petroliferos Fiscales Bolivianos.

State-owned Brazilian energy firm Petrobras, the largest foreign investor in Bolivian energy, had stated it would cancel further investments, but President Lula said this decision could be reversed after more negotiations.

Spanish giant Repsol, which has invested more than US$ 1 billion in Bolivia, said it plans to remain in the country and co-operate with Mr Morales’ government in spite of initial strong reactions supported by Spanish and EU officials.

Bolivia has South America’s second largest gas reserves behind Venezuela and the nationalization process comes on the heels of a similar policy in Venezuela forcing foreign corporations to become minority partners of the country’s oil company, PDVSA, and in Ecuador which imposed heavy windfall profit taxes on international companies operating in the Amazon basin.

Mercopress – www.mercopress.com

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