The Bolivian Army is now guarding all petroleum facilities

European and other South American nations have expressed concern over the declaration by Bolivia's President Evo Morales that his government will nationalize the country's energy resources.

Bolivia's President Evo Morales made good on an election promise by announcing Monday his government is nationalizing the county's oil and gas reserves.

President Morales making his announcemnt

"The property of this oil and natural gas passes from this moment into the hands of the state of Bolivia under the control of the Bolivian people," said President Morales.

Analyst David Wyss of Standard and Poors, a U.S. firm that analyzes market risk, said he believes Bolivia's decision will likely not have a severe impact.

David Wyss

"Well, it will not have any big impact in the short run because Bolivia just does not have that much of an oil and natural gas industry, so this is a relatively minor issue from the international energy market standpoint."

Under the decree, private energy concerns operating in Bolivia have been ordered to sell controlling stakes in their companies to the Bolivian government, and renegotiate existing royalty payments.

In a speech, President Morales said, "This is the solution to the social and economic problems of our country. Once we have recovered these natural resources, this will generate work. It is the end of the looting of our natural resources by multi-national oil companies."

Oil drilling

Throngs of Bolivians celebrated the announcement in La Paz, Bolivia on Monday. But private gas companies, which have investment interests of about $3.5 billion in the country, have expressed concern about the move. Major international firms, such as British Gas, British Petroleum, and Exxon say they are monitoring the situation.

Guilherme Estrella

Guilherme Estrella is Director of Exploration for Petrobras, the Brazilian National Energy Company. "There is no panic. We are not afraid to initiate a conversation with the Bolivian Government. There is no problem," he said.

Energy companies have six months to negotiate new contracts with the government. During that time, the Bolivian government says it will conduct audits of each company. Meanwhile, the government announced soldiers and engineers have been sent to strategic energy locations across Bolivia.

"From this moment, they will take control of all the oil fields in the country with engineering battalions that the Ministry of Hydrocarbons has organized with the government," sid the Bolivian president.

Bolivia is the latest Latin American country to try to gain more control over its oil and gas industries. Venezuela has increased taxes on foreign energy companies, and made them enter joint ventures with the state.

Ecuador now has a law that allows the government to renegotiate contracts with oil companies.

And in Peru, one of the presidential candidates has promised to nationalize its natural gas industry.

Bolivia is believed to hold the second largest stock of natural gas on the South American continent. It's oil holdings, however, are more modest.