THE FORUM
Dozens of private oil service companies nationalized last year by Venezuelan President Hugo Chavez have yet to be paid long-promised compensation, adding to bad blood between Chavez and oil firms even as he courts new foreign investors.
The Chavez government, which has taken over big areas of the economy in a push to build a socialist society in the OPEC nation, in May ordered the nationalization of 76 firms mainly specialized in transport, drilling and gas extraction.
The oil service firms affected by the takeovers included a local gas injection project run by Williams Companies (WMB.N).
The takeovers came after state oil company PDVSA built up large debts with its providers as oil prices slumped in 2009.
PDVSA has not revealed the outcome of a valuation of assets of the seized companies based on documentation it had requested from the firms, according to sources in the Venezuela oil services industry, including some of the affected companies.
"The companies have not been called to negotiate the amounts they are owed for the assets. They don't even know if the expropriations will be total or partial," said an industry source who asked not to be named.
Crude production in the Lake Maracaibo region where many of the companies are based fell last year as activity diminished following the takeovers.
Despite the nationalizations, in February Venezuela still managed to win large investments for its Orinoco region oil fields, in its first auction since nationalizing multi-billion dollar projects in the same extra-heavy crude belt in 2007.
Now, PDVSA is considering creating joint-ventures with the former owners of the nationalized projects, another source said.
"The information that PDVSA has officially given is that it is going to form joint-ventures with some of the expropriated firms," the source said.
Requests to PDVSA to confirm this information were not answered.
The sources consulted say that PDVSA has now paid most of the debts it owed the service companies prior to the takeovers, in large part giving the companies bonds instead of cash.
However, the sources said, PDVSA's debts to service companies in areas such as well-fitting and drilling fluids have increased over the last few months -- triggering worries that they may be in line for nationalizations next.
"Venezuela companies that are dedicated to these activities fear that the expropriation measure will be expanded to include them," one source said, but added that the government maintained good relations with transnationals such as Schlumberger (SLB.N) and Baker Hughes (BHI.N).
PDVSA owed over $8 billion to various service companies by June last year. The state company has not yet published its full-year financial results, but officials say much of that debt has now been paid off.
U.S. company Helmerich & Payne (HP.N), one of drillers that PDVSA owed large sums to last year, said in January that it expected to take a $20 million hit in Venezuela after the January 8 devaluation of the bolivar and said eight of its 11 drills were still idled while it awaits payment.