By Raymond Colitt

BRASILIA (Reuters) - Brazilian consumers andcompanies have lost nearly $4 billion and could lose billionsmore in the coming years due to neighboring countries'intervention in energy contracts, an industry report says.

Several neighbors have cut energy supplies to Brazil inrecent years due to power shortages or a surge in nationalism.

The most notable case was Bolivia's 2006 nationalization ofits gas industry, which included the military occupation ofassets owned by Brazil's state-oil company Petrobras.

Argentina and Venezuela also violated contracts to supplygas and power, respectively, while Paraguay renegotiated termson the Itaipu hydroelectric plant it shares with Brazil, notedthe study by energy industry group Instituto Acende Brasil,which was obtained by Reuters prior to its publication.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Political risks in Brazil [ID:nRISKBR]

Full coverage of Brazil's election [ID:nBRAZIL]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

It said the costs had been exacerbated by BrazilianPresident Luiz Inacio Lula da Silva's good neighbor policytoward South American neighbors that has prevented it fromtaking a tougher stance against contract violations.

Acende's study found that the nationalization moves costBrazilian consumers, investors and taxpayers 6.7 billion reais($3.9 billion) over the past decade and could cost them twicethat over the next decade.

"The reaction of the Brazilian government over the pastdecade has been quite foreseeable, always accommodating demandsand interventions of our neighbors, generating billions incosts," said the report.

Supply shortages from its neighbors led Brazil to adopt aseries of emergency measures, which Acende said cost 2.3billion reais between December 2007 and January 2009.

U.S.-based AES <AES.N> had to shut down a power plant in southern Brazil in April 2009 due to an unexpected tax hike andrestrictions on gas exports by the Argentine government.

AES continued to seek solutions to allow the resumption ofthe plant's operations, a spokeswoman said Thursday.

The report coincides with growing investor concern overmore government intervention and a bigger role for statecompanies if front-runner Dilma Rousseff, who was Lula's energyminister and later chief of staff, wins the Oct. 3 presidentialelection.

As part of its nationalization, Bolivia hiked taxes on gasproduction, cut supply and nearly tripled prices to at leastone power plant in western Brazil, Acende said.

Brazil's Energy Ministry did not comment on the report.

COOPERATION NOT CONFRONTATION

Domestic manufacturers and power generators who depend onBolivian gas were outraged.

But Lula, who Bolivian leader Evo Morales has called hisbig brother, urged patience and understanding.

"To those who defend confrontation we respond withcooperation," Lula said in early 2009.

Lula has tried to forge South American integration as acounterweight to U.S. and European interests in the region,financing dams, roads and farm equipment in the region.

"It's not good for a rich country to be surrounded by pooron all sides," Lula has said.

But political meddling in contracts can have the oppositeeffect on energy integration, said Acende chief Claudio Sales.

"Energy integration can be useful and everybody agrees allcountries need to develop. But in a capital-intensive businessthe best way to undermine development is tearing upcontracts."

(Editing by David Gregorio)