Feb. 23 (Bloomberg) -- A revival of investments in Bolivia, home to South America's second-largest natural gas reserves, will ease a regional shortage of the fuel in the ``medium term,'' Brazilian President Luiz Inacio Lula da Silva said.

Brazil, Argentina, Uruguay, Paraguay -- members of the Mercosur trade block -- can ease the growing need for electricity by expanding hydroelectric power reserves and interconnections between national electricity grids, Lula told reporters after meeting with leaders of Bolivia and Argentina in Buenos Aires.

Brazil has refused to reduce its right to receive 30 million cubic meters of natural gas it receives daily under a contract with Bolivia. Argentina and Bolivia want Brazil to cut its shipments to help Bolivia meet its commitments to Argentina when demand rises from June through September, which is the Southern Hemisphere's winter. Bolivia's, Argentina's and Brazil's presidents failed to reach a gas supply agreement during meetings today in Buenos Aires.

``After a long time, investment has started in Bolivia again,'' Lula told reporters in Buenos Aires. ``I think that in the medium term we are not going to have a problem because Bolivia will be able to supply its own needs first in the local market and then its contracts with Argentina and Brazil.

The presidents of Bolivia, Argentina and Brazil decided to create a committee to analyze the energy situation in the region, the Clarin Newspaper said today.

The committee will be made up of the county's energy ministers, the newspaper said.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

Last Updated: February 23, 2008 15:12 EST