Earlier, negotiations on the takeover had been held between YPFB and Air BP, which operates 12 fuel stations at airports across the Andean country.
However, a BP spokesman in London told the Reuters news agency: “We were surprised by today’s takeover process. But we will continue to support the handover.”
Oscar Coca, Bolivia’s energy minister, said that the government planned to compensate BP.
“The presidential decree calls for an assessment that has to be carried out in 120 days to determine the value,” he said, adding that the supply of fuel to Bolivian and foreign airlines will not be disrupted.
“The company has been in contact with us and let us know it will proceed with this change … Air BP’s shareholders are acting in a coherent manner.”
Since taking office in early 2006, Morales has nationalised energy, mining and telecoms companies previously in the hands of foreign investors.
Many of the previous moves have also been announced on international workers’ day, also known as May Day.
The country’s first indigenous leader has blamed foreign companies for Bolivia’s poverty, saying that they have “ransacked” its energy and mineral riches.
Some profits from nationalised firms have previously been invested in social programmes, including a universal pension system and grants to encourage children to study.