President Morales nationalizes gas, oil industry

May 1, 2006, 17:38 GMT

La Paz - Bolivian President Evo Morales Monday nationalized the gas and oil industry of the Andean country, following through on his election promise late last year.

The leftist president issued a decree that formalizes his intention.

Shortly after his election in December, Morales, 46, declared that the government would exercise 'its right to state ownership of Bolivia's hydrocarbons' through new legislation and renegotiation of contracts with international companies.

The move clashes with the secession efforts of the relatively oil- rich regions around Santa Cruz and Cochabamba, who are to vote in July on an autonomy referendum.

In an overture to reassure international investors in the energy sector, Morales pledged in December that he would respect oil companies' ownership of assets. Bolivia has the second largest natural gas reserves in South America, after Venezuela.

'That doesn't mean confiscating or expropriating multinationals' assets,' he said in December.

Morales, the first president in Bolivian history from the country's Indio ethnic majority, won Bolivia's presidential election by a wide margin. Indios make up 70 per cent of the population.

Most of the country's natural gas deals were sealed in 1996, when Bolivia conceded 40 years of rights to Repsol of Spain, Petrobras of Brazil, Total of France and British Gas.

Morales, who becomes the fifth president since 2002 in Bolivia, campaigned on a left-wing platform that would also legalize coca and redistribute wealth.