The deal calls for an increase in production from 41 million cubic meters per day to nearly 45 million cubic meters daily.

Among those benefiting from it are Brazil's state-run energy company Petrobras, Spain's Repsol and France's Total.

The new agreement was "aimed at ensuring an increase in production so we can continue to carry out what we have been doing in the domestic market and in that for exports," said Carlos Villegas, chief executive of Bolivia's state-owned energy firm Yacimientos Petroliferos Fiscales Bolivianos.

The deal struck by Bolivia and the foreign companies was a pleasant surprise for those who criticized Bolivian President Evo Morales for his handling of the country's No. 1 export.

Bolivia has the continent's second-largest known gas reserves behind Venezuela and is South America's largest natural gas exporter.

For Morales, the decision this week to increase exports was a departure of sorts for the leftist leader who nationalized Bolivia's energy sector in 2006 and levied increased taxes on foreign operators.

The decision to do so prompted Brazil's Petrobras operation in Bolivia to decrease its own output from 30 million cubic meters daily to less than 20 million.

However, Brazil is expected to return production levels to pre-nationalization levels in the coming months, according to Petrobras officials reacting to the Morales government's agreement with foreign firms.

The new agreement was particularly well received by Brazil, and especially Argentina, which is among Bolivia's largest customers for natural gas and has in recent years faced shortages during winter months due to Morales-mandated production cuts.

The increase, according to some experts, showed an understanding by the hard-line leftist Morales government of the need to capitalize to the fullest extent on the potential of the Bolivian gas sector to meet his administration's growing demands for revenue needed to fund his social agenda.

Morales has faced harsh criticism from some in Washington for his handling of the natural gas industry and for his close ties to Venezuelan President Hugo Chavez.

"The deal indicates some level of pragmatism in President Evo Morales' administration and reduces the risk of further expropriations in the sector," wrote Erasto Almeida, a Latin America analyst for the Eurasia Group consulting firm. "Despite his radical leftist views, Morales has been forced to show some moderation in his policies for this sector."

Bolivia's gas industry has for decades been a hot-button issue for the country's leaders. Opponents of Morales from Bolivia's gas-rich eastern provinces contend the president is using their natural wealth to fund aid programs for the country's poor, the vast majority of whom are indigenous. Morales is the country's first indigenous leader in the modern era and an ardent support of Bolivian indigenous issues such as the production of coca, the plant from which cocaine is made.

Last year, three eastern provinces, all with large gas deposits, voted in favor of greater autonomy from the central government, noting that their profits go largely to pay for Bolivian social programs that benefit the largest indigenous population in the west.

Morales denounced the vote, calling it illegal and vowing it would not be recognized by his government. He also called on governors from other provinces in eastern Bolivia to sit down to talks before carrying out their own autonomy votes.

Previous Bolivian presidents have found themselves falling victim to the contentious gas revenue debate.

In 2003, President Gonzalo Sanchez de Lozada was forced from office during widespread violence that left dozens dead after he suggested Bolivia sell natural gas to its longstanding rival and neighbor Chile, to whom his country lost its coastline during a 19th century war.

The gas issue was eventually the undoing of President Carlos Mesa as well. In June 2005, the Bolivian leader faced a round of violent protests over how gas revenue was being spent. Mesa eventually stepped down, opening the door for Morales' victory and his decision to nationalize the gas industry.

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