Bolivia's military takes control of gas fields

LA PAZ, Bolivia - Bolivian President Evo Morales ordered the military to occupy the country's natural gas fields on Monday after nationalising the energy sector and threatening to expel foreign companies if they do not sign new contracts within six months.

Impoverished Bolivia has the second-largest natural gas reserves in South America after Venezuela, and the question of how the country should manage these riches has been at the heart of several popular revolts since 2003.

Morales became president in January on vows to exert more state control over the country's natural resources, reflecting a growing backlash against free markets and foreign investment in Latin America. Radical leftists recently complained that he had made little progress on this front.

The president chose Labour Day, May 1, to announce the sector's nationalisation, which stipulates companies will have to leave the country unless they sign contracts recognising the new state control of the fields.

"We are not a government of mere promises: we follow through on what we propose and what the people demand," Morales said after signing a nationalisation decree at the San Alberto field, operated by Brazil's state-owned Petrobras in the southeastern province of Tarija.

"We want to ask (the Armed Forces) that starting now, they occupy all the energy fields in Bolivia along with battalions of engineers," Morales said.

Bolivian Vice President Alvaro Garcia said officials from state energy company YPFB and the military began taking control of dozens of energy installations -- including gas fields, pipelines and refineries -- after Morales signed the document.

At a Labour Day celebration in La Paz's main plaza attended by a large crowd, Garcia said the government's energy-related revenue will jump to US$780 million ($1.2 billion) next year, expanding nearly sixfold from 2002.

Morales had promised to nationalise the gas sector even during his campaign but repeatedly said he would not expropriate foreign companies' assets.

Bolivia's actions echo what Venezuelan President Hugo Chavez, a Morales ally, did in the world's fifth-largest oil exporter with forced contract migrations and retroactive tax hikes -- conditions that oil majors largely agreed to accept.

- REUTERS