As troops seized oil and gasfields, Señor Morales said that the oil majors had six months to sign new operating contracts or get out of the country.

Western diplomats drew parallels between the move and the regime of the openly anti- American President Chavez of Venezuela, while industry analysts said that it would increase still further the pressure on oil prices, already pushed above $70 a barrel by fears over Iran’s nuclear programme and instability in Nigeria.

As the Bolivian Army moved into 56 locations around the country, including sites run by BP and BG Group, of Britain, Señor Morales said: “The looting by the foreign companies has ended.”

Reaction was swift, especially in Spain, whose Repsol YPF is the Western multinational with the largest interest in Bolivia. Analysts estimate that Repsol’s rights to gas in Bolivia represent about a third of the company’s total oil and gas reserves. It has invested €1 billion (£680 million) in Bolivia.

The Spanish Foreign Ministry said that it hoped that the Bolivian Government would start a process of “negotiation and dialogue” with foreign companies to guarantee their interests.

Shares in Repsol YPF slipped 0.7 per cent to €23.51 yesterday on the Madrid Bolsa.

BG and BP played down threats of a legal stand-off with the Bolivian Government. Both said that it was too early to assess the impact of the new presidental decree but emphasised that they were not planning a wholesale withdrawal from the country.

Bolivia accounts for only about 3 per cent of BG’s global production portfolio, and even less for BP. BG owns and operates six gas condensate fields and supplies gas to the Brazilian market. In addition, BG has a 37.5 per cent stake in the big Margarita gas condensate field, in the country’s south. BP also has a stake in Margarita and an interest in another gasfield.

Shares in both companies were unaffected. However, shares in Petrobras, the Brazilian energy company, which has the second-largest holding in Bolivia among foreign companies, did dip. The Brazilian Government complained of an “unfriendly gesture” and a “rupture in understanding”. The United States said that it was considering its position. The European Union said that it was “concerned” by the move.

Under the new rules, all foreign energy firms operating in Bolivia will have to deliver all their production to the state-run YPFB for distribution and processing. They have 180 days to adjust their operating contracts. If they refuse, they can resort to international arbitration or leave.

Bolivia has the second-highest natural gas reserves in Latin America, with an estimated 54 trillion cubic feet. It produces a small amount of oil for domestic use. It will take control of 82 per cent of the country’s gas and oil and leave the rest to foreign companies.

An International Monetary Fund spokeswoman said that the nationalistation could force the oil price even higher.

“Bolivia is a new development, but there are uncertainties in Nigeria, Iran, Iraq. You can imagine that any further uncertainty with respect to Bolivia will also have an impact on prices,” she said.

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