The demonstrators also cut off roads to neighbours Argentina and Paraguay and damaged the Transredes facility.

 

Rival claims

 

Protests were also held in the nearby town of Villamontes, as Gran Chaco residents demand a greater share of royalties from the Margarita natural gas field amid rival claims by the neighbouring O'Connor province.

 

Authorities rejected the protesters' demand that a pipeline that supplies 7.7 million cubic metres of natural gas a day to Argentina be shut off until the dispute is resolved.

 

"The national government cannot accept this because it would be a crime against the national economy," said Alex Contreras, a presidential spokesman.

 

"We cannot lose $1.5 million a day because valves are shut off."

 

He said natural gas supplies to Argentina were not affected by the protests.

 

Nationalisation delays

 

The Margarita gas field, which is at the centre of the dispute, is believed to contain 20 per cent of Bolivia's proven and probable natural gas reserves.

 

Royalties from the field, which is operated by Spain's RepsolYPF, amounted to $25m last year, when Evo Morales, Bolivia's president, announced the nationalisation of Bolivia's hydrocarbons sector.

 

Nationalisation forced foreign companies to negotiate new contracts giving Bolivia a majority share of the revenues generated in the energy sector.

 

Political disagreements over the new contracts have caused major delays to the nationalisation process.

 

Bolivia's congress is working to approve 44 rewritten contracts with 10 multinational companies.

 

South America's poorest country, Bolivia has the region's second-largest natural gas reserves, after Venezuela.