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South American gas giant in turmoil

The president of Bolivia submitted his resignation on Monday night.

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The sound of exploding dynamite tossed by protesting miners in Bolivia's capital is reverberating across South America.

For three weeks, largely indigenous protesters have paralyzed the government and its capital, La Páz, demanding nationalization of the country's oil and gas resources and a new constitutional assembly. Two government ministers have resigned, rumors of a military coup have swept the capital, and Monday night President Carlos Mesa offered his resignation - for the second time in three months. Mr. Mesa said he will continue on as president until Congress decides whether to accept his offer.

Bolivia's turmoil is leading neighboring countries to reexamine their energy dependence on this landlocked Andean nation.

With an estimated 53 trillion cubic feet of natural gas, Bolivia holds the continent's second-largest gas reserves after Venezuela. Moreover, Bolivia's location among the surging economies of Argentina, Brazil, and Chile means the country is well positioned to be the fuel supply for the region's engine of growth. But complicated internal politics may push development of those resources far into the future.

"Bolivia is losing a real window of opportunity," says Carlos Alberto López, a former vice minister of energy and a consultant to the oil and gas industry. "Instead of using that window to lock in long-term contracts, we're watching it slip away."

Last month, Bolivia's Supreme Court declared 72 existing oil and gas contracts invalid because they were not explicitly approved by Congress. That was followed by the passage of a new hydrocarbons law that raises royalties and taxes on gas to 50 percent, more than double previous levels.

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