Brazilian and Bolivian government authorities and representatives from their respective oil companies - Brazil's Petrobras (NYSE: PBR) and Bolivia's YPFB - have been in talks for the past month.
Although talks include compensation for the nationalization of some Petrobras assets in Bolivia, the main issue is the price of the gas that Bolivia sells to Brazil.
Petrobras currently pays some US$3.80/MBTU and Brazilian press has reported that Bolivia wants to raise the price 50-100%.
Bolivia's nationalization decree included a 180-day transition period during which the government would audit operations of foreign oil companies in Bolivia to see if they comply with new legislation.
Petrobras initially said it would not accept price increases. Lula has guaranteed gas prices to end-consumers will not increase.
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