Venezuela’s Chavez Sets Oil Fields Takeover for May; Says Bush Should Resign

Caracas, February 2, 2007 (venezuelanalysis.com)— Venezuelan President Hugo Chavez announced the government’s planned takeover of the Orinoco belt oil fields, and the re-nationalization of the electricity sector at an international press conference yesterday. He also responded to U.S. President George W. Bush’s “concerns” over Venezuelan democracy.

Oil fields takeover

In front of the assembled audience of foreign correspondents, President Chavez signed the Enabling Law, passed by the National Assembly Wednesday. The law will allow Chavez to pass laws by decree in eleven different areas for a period of 18 months.

At the news conference, Chavez outlined plans for Venezuela ‘s state oil company Petróleos de Venezuela SA (PDVSA) to become the majority stakeholder in four projects in the Orinoco belt oil fields, with a minimum stake of 60%.

The Venezuelan Head of State expressed his hope that the five foreign firms operating in the Orinoco Oil Belt, which include Exxon Mobil, Chevron Corp., British Petroleum PLC, Total SA and Statoil ASA, would remain as minority partners.

"I’m sure that they [the foreign companies] are going to accept because we are going to continue being partners, but if they aren’t in agreement, they are totally free to leave," he said.

However, Chavez expressed hope that “these companies cooperate. We are not causing any conflict. We want to negotiate… but I have given instructions that on May 1 all those fields should awake under our control.”

The Minister for Energy and Mines, Rafael Ramírez, who has been quoted as saying the oil fields will be seized if no agreement is reached with the international oil companies, announced, “We are going to take control as of May 1,” and explained that definitive agreements could be signed at a later date.

Chavez told the press conference that the 3 to 4 thousand workers who are currently employed by the companies operating in the Orinoco Oil Belt will become part of PDVSA once the nationalization scheme is specified, and said that they will have “all the rights and obligations of a [PDVSA] worker.”

Speaking from Miraflores Palace, Chavez explained that the nationalization process would be regulated through a law included in the Enabling Law and noted that “all the laws are aimed at national development, through the eleven areas indicated here.”

Under article 74 of the Constitution, all laws are susceptible to being annulled by popular referendum.

Chavez also pointed out that nationalizations would always be limited “to strategic areas,” in an attempt to assuage those who fear moves to expropriate private companies.

Electricity sector nationalization

President Chavez also took the opportunity to announce that as part of the government’s recently announced nationalization plan for the energy sector, six electricity companies will be turned over to State ownership.

“The nationalization of the electrical sector is one of the first laws to be approved [because] it is a necessity, not a whim. One of the priorities is the nationalization of the electricity sector. It was a monumental mistake to have privatized it,” Chavez declared.

In January, Chavez announced a plan to nationalize strategic companies in the telecommunications, electricity, and oil sectors, in what he called a first step to deepen the socialist revolution.

The measure to nationalize the electricity sector will involve Electricidad de Caracas (EDC) and its subsidiaries in four states. “All of this will be nationalized,” Chavez said.

Chavez asserted that 87% of EDC workers, who own 1% of the company’s shares would maintain their stake, but added, “if they want to sell, they will be compensated.”

"The nationalization measure requires the enactment of a specific law and the modification of the present electricity sector law,” Chavez stated, adding that the reform to the electricity service law would, in turn, require the go ahead from the Venezuelan Supreme Court of Justice (TSJ).

Chavez will decree the new nationalization law and reform other laws in a package of legal measures that must be approved over the next 18 months while he has special powers to legislate.

Chavez’s Response to Bush

During the press conference, Chavez also personally responded to remarks made earlier this week by George W. Bush and recently designated deputy Secretary of State, John Negroponte. The pair had raised concerns over Venezuela’s democracy, with Negroponte calling President Chavez “a threat to democracy.”

The Venezuelan leader condemned the U.S. war in Iraq and said that Bush and Negroponte, a former director of national intelligence, should be tried for "war crimes" committed by the U.S. military across the globe.

“The two of them are criminals. They should be tried and thrown in prison for the rest of their days,” Chavez told his audience.

The Venezuelan Head of State called on Bush to resign saying, “If he had any dignity, the president of the United States would quit. The U.S. president no longer has any political or moral capacity to govern,” he stated.

“If only the United States had a democracy like Venezuela’s. If only the people of the United States had the power to call a recall referendum,” Chavez lamented, adding, “he would be voted out of the United States’ government right away.”

“This Constitution is the broadest and the most profoundly democratic in the world, and I have no doubts about that […] this Constitution allows the people to annul laws. I would ask that this be noted,” Chavez said.

The Venezuelan constitution, passed into law by referendum in December 1999, emphasizes participation at all levels and incorporates a series of articles that enable ordinary citizens to have a direct influence over public affairs. Crucially, article 72 states that ‘all elected posts’, from the president down, can be subjected to a recall referendum after officials reach the midway point of their term in office.

In August 2004, a recall referendum on Chavez’s mandate took place, which Chavez won with 59.1% of the vote.