At least $1.73 billion of public funds may go into raising the landlocked country's natural gas production and augmenting other state-run energy projects.

Bolivia has battled with the problem of huge trade imbalances, including those with the United States, and resulting shortfalls in revenue and predictable setbacks to poverty reduction programs for a largely impoverished population of 10 million.

Officials didn't immediately say how the financing of the new energy projects would be conducted, but industry sources said some funding might come from prospective importers of gas.

Nearly a dozen foreign companies are involved in Bolivia's gas prospecting, production and distribution operations but disputes between investors and the administration of President Evo Morales have delayed progress on some of the new ventures.

This year, Morales was in disagreement with two U.S. firms over estimates of Bolivia's gas reserves. In each case because Morales and senior aides thought the figures of reserves presented in prospecting reports were lower than they expected.

Carlos Villegas, head of the state-owned Yacimientos Petroliferos Fiscales Bolivianos, said the government planned to focus on raising gas production to ensure adequate production to supply Argentina and Brazil, as well as the domestic market.

He said plans were for YPFB to invest $1.73 billion in the energy industry in 2011.

"It's going to be a level of investment that will break records going back a long time, and it will make it possible to achieve important increases in terms of production," Villegas said.

YPFB will be able to meet its contractual obligations to provide 31.5 million cubic meters per day of gas to Brazil and 7 million cubic meters per day of the fuel to Argentina, MercoPress reported, quoting Villegas.

Bolivia agreed to provide Argentina with a minimum of 7.7 million cubic meters a day of gas as of Jan. 1 with the export level rising to 27.7 million cubic meters a day by 2017, Villegas said.

Bolivia's contract with Brazil calls for minimum exports of 24 million cubic meters a day and a maximum of 31 million cubic meters a day of gas, Villegas said.

Bolivia's domestic market consumes 8.5 million cubic meters daily of natural gas.

"The investments we are going to make next year will cover the increase," Villegas said, adding the company plans to expand gas production to 71 million cubic meters a day over the next few years.

Bolivia has around 8.3 trillion cubic feet of gas reserves, or about one-third of the 26.7 trillion cubic feet of reserves previously estimated.

The government says the country has more gas than cited in recent estimates made on its own request. U.S. reservoir appraisers DeGolyer and MacNaughton estimated Bolivia's proven gas reserves at 26.7 trillion cubic feet in 2005 but revised that figure to 12.8 trillion cubic feet in a report the following year. The government reacted by canceling the firm's contract. The lower figure wasn't made public until November.

A further assessment of the reserves by U.S. consultants Ryder Scott also didn't meet with the government's approval. Villegas told the Legislative Assembly that Bolivia had asked the company to make unspecified corrections.

Controversy over the size of the reserves increased when analyst Hugo Del Granado further lowered the confirmed estimate to 8.3 trillion cubic feet, causing a stir in Bolivia's government circles and energy industry.

Bolivia has been seeking further opinions since that revised estimate became public.

Energy analysts agree that Bolivia's energy industry is ripe for further cash inflows but much depends on the government's handling of investor interest. Major foreign energy firms active in Bolivia include Spain's Repsol YPF, Brazil's Petrobras, Britain's BG Group and French major Total.

Despite the reduced estimates of gas reserves, Bolivia's promise to spend more on developing the resource has kept the investors interested in the country.

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