'Comrades' in arms: Bolivian President Evo Morales, left, with visiting Brazilian President Luis Inacio Lula da Silva in La Paz today
Petrobras launches $1bn Bolivian gas plan
Brazil's state energy company Petrobras announced plans today to invest up to $1 billion in Bolivia to increase natural gas production and look for new reserves of the fuel.
The plan marks a turning point in strained relations between the leftist government of Bolivian President Evo Morales and Petrobras, which criticised Morales' energy nationalisation last year and froze planned investments.
The two countries signed a series of energy co-operation deals during a two-day visit by Brazilian President Luiz Inacio Lula da Silva that aimed to secure Brazil's supplies of natural gas and patch up ties with its poorer neighbour.
"I want to tell Petrobras's president that although there was a certain lack of trust after the changes to our energy policies, we've never sought to harm any company," Reuters reported Morales said in a speech at the presidential palace in La Paz.
"Every investor should recover their investment, not just recover it, but also have a right to the profits. We'll always guarantee that," said Morales, a close ally of Venezuela's fiery left-wing President Hugo Chavez.
A text of the Petrobras investment accord said the company envisioned spending between $750 million and $1 billion to increase gas output.
The other energy agreements include a plan by Brazilian petrochemical firm Braskem to study a joint venture with Bolivia's state energy company YPFB to build a methane plant.
Petrobras employees will also give technical and commercial training to their counterparts in YPFB.
Brazil is Bolivia's biggest natural gas customer and a gas shortage in Rio de Janeiro in October reminded the wealthier country how much it relies on its smaller neighbour for its supplies.
Economic expansion in Brazil, Chile and Argentina has increased demand for energy across the region and Bolivia has South America's second-biggest gas reserves after Venezuela.
However, Lula's visit was not confined to energy issues. He also signed accords to give loans for farm machinery and increase co-operation between the countries' universities.
Diplomats in Brasilia have said Lula wants to win back Brazil's influence in Bolivia from Venezuela's Chavez, and he sought today to draw a line under the spat over the energy nationalisation.
"In the end, Evo Morales and Lula didn't fight like some people wanted us to fight. We didn't become adversaries ... we became comrades," Lula said.
The trip was well-timed for Morales, who is facing fierce resistance to his reform plans from right-wing opponents. They frequently attack his close relationship with Chavez, but the more moderate Lula is a less controversial ally.
** Petrobras also said today it is in talks with Uruguay and Argentina to build a liquefied natural gas unit to supply both countries.
The plant would be built in one of the two countries, to process up to 10 million cubic metres per day, said Petrobras' international operations manager, Flavio Lianna.
"The project has not been defined yet. Argentina and Uruguay are working together," Lianna told journalists, adding that the plant would supply both countries, mainly during winter months.
Petrobras intends to start operating two new regasification plants in Brazil in the coming years.
The first one, in Rio de Janeiro state, should come on stream in 2008 with an output capacity of around 14 million cubic metres per day.
The second one is expected be built in Ceara state, in the northeast of Brazil, to produce up to 6 MMcmd from 2009.