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News: Oil and Gas

Venezuela to Nationalize 11 Oilrigs Owned by US Oil Company

Caracas, Venezuela, June 24, 2010 ( The head of the Venezuelan state oil company PdVSA declared yesterday that the government is to nationalise 11 oilrigs previously operated by a US petroleum firm after the company closed down production and refused to negotiate a new services agreement.

PdVSA President Rafael Ramirez said that the nationalisation would “boost domestic production of hydrocarbons and strengthen the policy of full oil sovereignty.”

The firm, Helmerich & Payne, ceased operations in the state of Anzoategui nearly a year ago, claiming it was owed $49 million from the Venezuelan government in service payments.

Ramirez, however, argued that the company had not even sat down to negotiate.

He cited ulterior motives for the conduct of its management, saying: “There is a managerial class within the drilling sector that has refused to negotiate service tariffs with PdVSA.”

He said Helmerich & Payne’s actions were part of a plan by private companies within the industry to reduce oil production in order to weaken the government of President Hugo Chavez.

“We are not going to allow them to sabotage our operations like they did at the end of 2002,” he said.

In 2002, the former management of PdVSA and administrative and professional employees, with support from the opposition and private oil companies, shut down the oil industry in an attempt to bring down the Chavez government.

The attempt ultimately failed as Chavez, his supporters and many oil workers mobilised to re-take control of PdVSA and restart production.

Ramirez said that workers at Helmerich & Payne had played their part in this nationalisation too.

According to Ramirez, the workers had occupied its plant in order to bring the idle state of the company’s drilling facilities to public attention.

He said, “The workers decided to take custody of the installations while we await a favourable decision from the National Assembly.”

The National Assembly must now approve a “declaration of public utility,” meaning that there is a public interest in the nationalization of Helmerich & Payne – a necessary step for the nationalisation to be carried out.

According to Venezuelan law, the former owners of the company will be eligible for compensation.

Petroleum production and the sovereignty of the oil industry are central to Venezuela´s Bolivarian Revolution.

Figures released by Ramirez himself last week showed that PdVSA had spent $56 billion on social programmes between 2001 and 2008.

Published on Jun 24th 2010 at 6.41pm