Oct. 23 (Bloomberg) -- Bolivia, which holds South America’s second-largest natural-gas reserves, has seen reduced gas output and investments since the government took greater control of its energy assets, former President Jorge Quiroga said.

Since President Evo Morales’s government raised taxes and forced companies to renegotiate energy contracts three years ago, it has stifled investments, said Quiroga, who held office from 2001 to 2002 and leads the Andean country’s largest opposition party.

“There are great announcements, but we do not have any new investments,” Quiroga, 49, said yesterday in an interview in Lima. “Bolivia is viewed as an unreliable supplier.”

Brazil’s Petroleo Brasileiro SA cut its Bolivian gas investment, and the U.S.’s Duke Energy Corp. and Cayman Islands- based AEI pulled out of the country after Morales seized oil and gas fields and refineries in 2006. Bolivia, South America’s poorest nation, relies on gas for half its export income.

Brazil, Bolivia’s largest gas buyer, has cut gas purchases to 21.1 million cubic meters a day from 24 million cubic meters, state oil company YPF Bolivianos has said. Brazil is increasing its own gas output to reduce dependence on Bolivia, according to Brazil’s energy research agency.

Private oil and gas investment in Bolivia dropped 55 percent to $274 million in 2008 from $605 million a decade earlier, according to YPF Bolivianos.

YPF Bolivianos spokesman Manuel Mercado didn’t return calls seeking comment.

Venezuela holds South America’s largest natural-gas reserves.

Lithium Investment

If Bolivia can also attract investment for its lithium deposits, it may become a “key player” in the world’s lithium industry, said Quiroga. Bolivia contains about half of the world’s known 11 million metric tons of lithium reserves, according to a U.S. Geological Survey report.

Lithium is used to make batteries for portable electronics such as cellular phones, I-pods and may power electric cars. Potential bidders for Bolivia’s lithium deposits include Brazil’s Vale SA, French companies Bollore SA and Eramet SA, as well as Japan’s Mitsubishi Corp. and Sumitomo Corp. Morales has said the government must be a partner in any project.

“If rechargeable lithium batteries become the dominant technology for cars, the world will need Bolivia’s lithium,” Quiroga said. “We can be a very big player.”

To contact the reporters on this story: John Quigley in Lima at jquigley8@bloomberg.net; Alex Emery in Lima at aemery1@bloomberg.net.

Last Updated: October 23, 2009 15:37 EDT