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BOLIVIA: Petrobras accused of supply 'sabotage'

May 30th, 2006

The president of Bolivia's state energy company has accused the Brazilian energy company Petrobras of "sabotage," blaming it for problems in supplying diesel fuel in Bolivia.

Petrobras Bolivia de Refinacion, a subsidiary of Petrobras, is one of the companies responsible for importing government-subsidized diesel into Bolivia, but it has stopped doing it in recent days, said Jorge Alvarado, the Yacimientos Petroliferos Fiscales Bolivianos, speaking to reporters late Monday.

"I interpret the attitude assumed by Petrobras as an act of sabotage toward the country, I can't understand in any other way," he said.

Alvarado acknowledged that the government might be behind in payments to Petrobras for the subsidized fuel, but he said that until recently that was never a problem.

On May 1, President Evo Morales nationalized Bolivia's natural gas industry decreeing that the state company would take majority control over all energy operations in the country.

He gave foreign energy companies six months to negotiate new contracts or leave the country.

Petrobras -- formally Petroleos Brasileiro SA -- is Bolivia's largest investor, having sunk US$1.6 billion in the past decade, and it has the most to lose from the nationalization. Brazil also gets half of its natural gas from Bolivia.

The nationalization decree cause tension between Petrobras and the Bolivian government and Petrobras says it plans to reduce its dependence on Bolivian gas. Brazilian President Luiz Inacio Lula da Silva has soothed relations lately, saying Brazil will continue to buy gas from Bolivia, at least in the short term.

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