Venezuela moves forward with oil nationalizations

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CARACAS, VENEZUELA — Venezuela’s state oil company said Tuesday that it has taken control of 90 percent of oil contractors on western Lake Maracaibo as it aims to reduce costs due to falling crude prices.

President Hugo Chavez announced last week that Venezuela is nationalizing 60 oil contractors as his government moves to assert control over the industry under a new law approved by the pro-Chavez National Assembly.

Many of the contractors run boats, docks and other facilities on Lake Maracaibo in oil-rich Zulia state, while others process natural gas or inject water into oil fields to help extract crude.

State-run Petroleos de Venezuela SA, or PDVSA, has recently clashed with domestic and foreign service providers, falling behind on billions of dollars in payments as it aims to cut costs by 40 percent.

Oil Minister Rafael Ramirez said some contracts negotiated at last year’s soaring crude prices are now overvalued. “We’re not going to pay abusive rates to anybody,” he said Tuesday.

Venezuela relies on oil for 93 percent of exports, but has seen world oil prices fall 60 percent since their July peak. A barrel of light, sweet crude was trading at $58.73 on the New York Mercantile Exchange on Tuesday.

Under a resolution published in Venezuela’s Official Gazette on Monday, 39 companies currently providing services to PDVSA will be brought under government control — including New Orleans-based Tidewater Inc. and Gulmar Offshore Middle East LLC, based in Sharjah, United Arab Emirates.

Some companies not mentioned in the resolution will also be affected by the law, including SIMCO consortium and natural gas processor and distributor Williams Companies Inc. SIMCO’s largest partner, Wood Group, is based in Houston. The Wood Group’s parent company, John Wood Group PLC, is based in Aberdeen, Scotland.

PDVSA said in a statement Monday that it has taken control of three gas-compression facilities in eastern Venezuela belonging to Tulsa, Oklahoma-based Williams Cos.

Accumulated debts with PDVSA have prompted some foreign oil drillers to halt their Venezuela operations, including Ensco International Inc., which stopped drilling its offshore rig in January, saying Venezuela owed it $35 million.

The Dallas-based company said in a statement Monday that it has notified PDVSA that it intends to terminate its contract due to nonpayment.

AP

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