GABARONE, Botswana (Reuters) - Botswana is "compelled to honour" an agreement to support a rights issue by diamond producer De Beers, a minister said, though how the cash-strapped southern African nation will fund its share of the offering is unclear.

Valley of Diamonds by De Beers

The world's largest diamond producer, 45 percent owned by Anglo American, wants to reduce its $4 billion debt pile by raising up to $1 billion of new equity. Botswana's share would cost it around $150 million.

"As a country dependent on diamonds we are bound to be compelled to honour the agreement that has been made in principle," Minerals, Energy and Water Resources Minister, Ponatshego Kedikilwe said.

But it is not clear how Botswana, where diamond exports plummeted to the point where the country had to seek a bailout from African Development Bank, will finance its part of the issue.

"We are in discussion with all our partners on how we can keep the company afloat," he said, given the firm's importance for projects the country is embarking on.