Morales: Petrobras Won't Be Expelled But Gas Prices Will Rise

Bolivia will not expel Brazil's federal energy company Petrobras (NYSE: PBR) from the country but will increase the price of gas it sells to the country, Bolivia's President Evo Morales said in an interview to GloboNews cable television on Thursday.

"We are not expelling Petrobras," Morales said. "It will just not be as profitable as before. If the company wants to help Bolivia, not only through cooperation, it will have a cost: prices will be at rational level that helps Bolivians but doesn't harm Brazilians too much."

He stressed that a new price level will be negotiated.

The comments were aired a day after Morales said Petrobras has been operating illegally in Bolivia and compensation might not be paid to the oil companies that Bolivia's state oil company YPFB took control of through the May 1 nationalization decree, local press reported.

Officials from Petrobras and YPFB and government officials from both countries met on Wednesday in La Paz to start bilateral talks over new contracts, prices and compensation payments.

But tension between the two countries remain high, according to local press.

Brazil's foreign minister Celso Amorim told lawmakers at a hearing earlier this week that Brazil will be firm with Bolivia to defend its interest and criticized the presence of Bolivian army outside Petrobras facilities on May 1, local press reported.

On Tuesday, YPFB's announced new directors at Petrobras' Bolivian subsidiary Petrobras Refinación. Petrobras said in a statement the nomination would only be effective if technical criteria are followed.

Nevertheless, Brazil's mines and energy minister Silas Rondeau told GloboNews he hoped negotiations would follow the law and agreement reached in La Paz.

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