The Russian state-owned energy giant Gazprom is eyeing a $2bn gas investment in Bolivia, according to sources familiar with the negotiations.

“We are closing a deal with Gazprom in two sites for gas exploration. They are very interested. And we are very interested in them being our partners,” Carlos Villegas, Bolivian hydrocarbons minister, told the Financial Times.

A Gazprom delegation was at the ministry for negotiations late last month.

While confirming Gazprom’s interest in Bolivia, however, Sergei Kupriyanov, the Russian gas monopoly’s spokesperson, said: “I don’t think we have reached the stage where we can speak of any kind of investment decision. It is too early to put a figure on a possible investment”.

The CEO of an energy company with interests in Bolivia, who recently met Gazprom officials in Moscow, said that a Russian delegation had been undertaking due diligence in Bolivia.

“My understanding is that they have been talking about the Russians investing $2bn in production capacity,” the CEO said.

An official from the Bolivian hydrocarbons ministry confirmed the Gazprom deal with YPFB (Yacimientos Petrolíferos Fiscales Bolivianos), the Bolivian state energy company, could be about $2bn (€1.4bn, £1bn) and was expected to be finalised in 2008.

The official said the Russians were looking at gas exploration, either in two sites in Tarija, Bolivia’s main gas producing region in the south of the country, or in sites in Santa Cruz to the east and Chuquisaca in the south.

Bolivia has vast gas reserves, second only to Venezuela in Latin America.

However, the country is suffering from a lack of investment to boost production. President Evo Morales’ decision last year to nationalise energy resources has made many foreign energy companies wary of investing in Bolivia to boost production.

Currently Spain’s Repsol-YPF, Petrobras of Brazil, Total of France and BG of Britain are the prominent foreign companies still operating in the country.

The lack of investment is one reason why Bolivia is not able to fulfil contracts to supply gas to its neighbours Argentina and Brazil.

Argentina is heavily reliant on Bolivian gas and suffering severe shortages due to the shortfalls of Bolivian production.

To meet all its supply commitments, Bolivia will need to almost double production from about 39m cubic metres of gas a day to 75m in the next three years.

Brazil’s Petrobras has just announced new investment of $750m in Bolivia in an effort to ensure future supplies for Brazil.

Sylvie D’Apote, of Cambridge Energy Research Associates, said that as a state-owned company, Gaz-prom was a natural partner to Bolivia’s state-run YPFB, which would prefer investment by another state company to private foreign investors.

Over the past three years deals between state-owned oil and gas companies have increased as governments in resource-rich countries have looked to assert more influence in their hydrocarbons industries.

Ms D’Apote estimates Bolivia would need investment of about $3.2bn in the next two to three years to meet its gas supply contracts – or double that level if liquids including oil and liquefied petroleum gas were taken into account.

Dmitry Medvedev, Gaz-prom chairman, was anointed this week by President Vladimir Putin as his preferred successor in elections next March. Gazprom accounts for 20 per cent of global gas supply and pumps a quarter of Europe’s gas.