(Recasts with comments from Lula, Bachelet)

By Gideon Long

SANTIAGO, April 26 (Reuters) - Brazilian President Luiz Inacio Lula da Silva played down differences with Venezuela's Hugo Chavez over energy policy on Thursday, saying the region's nations should work together to meet their energy requirements.

Speaking in the Chilean capital Santiago, where he signed a biofuels agreement with energy-poor Chile, Lula said relations between the business communities in his country and Venezuela were good.

"We have some very big Brazilian investments in Venezuela and there are some very strong Venezuelan investments in Brazil, so I don't see any problem," he told a news conference.

"But I also don't believe in Chavism," he said, in apparent reference to Chavez's efforts to export his radical socialism to other countries in the region. "I believe in the existence of a South American consensus."

Lula and Chavez clashed over their respective energy policies at a summit in Venezuela earlier this month.

Brazil, a big producer of ethanol, is promoting biofuel as an alternative to fossil fuels, while Venezuela, the world's fifth-biggest oil exporter, says over-production of biofuels would lead to food shortages and hunger.

Playing down the clash, Lula said: "We have all the conditions in South America to resolve our energy problems ... by using our potential and the possibilities we have to complement each others' strengths."

ENERGY SHORTFALL

The biofuels agreement Lula signed with his Chilean counterpart, Michelle Bachelet, will allow for technical cooperation between the two countries and is designed to help Chile overcome its chronic energy shortfall.

Unlike many Latin American nations, Chile produces no natural gas and almost no oil of its own and relies on gas imports from Argentina, which is facing increasing pressure to supply its domestic market.

Gas-rich Bolivia, to the north, refuses to sell gas to Chile because of a long-running dispute over landlocked Bolivia's demand that it be given access to the sea.

To compound the problem, Chile's economy is particularly vulnerable to energy shortages because a large part of it is based on copper mining, which is extremely energy-intensive.

"We don't want to depend on just one provider, we don't want to depend on just one energy source," Bachelet said after signing the accord.

Brazil has more than 30 years' experience of producing biofuels and currently produces about 17.5 billion liters of ethanol a year from sugar cane.

The clean-burning fuel can be used as an alternative to fossil fuels, cutting carbon dioxide emissions.

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