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Venezuela to takeover oil services companies

CARACAS
Petroleumworld.com, May 6, 2009

Venezuela congress approved on Tuesday the first of two discussions on a proposed law that will give President Hugo Chavez the right to takeover foreign and local oil services companies.

The Venezuelan Congress or National Assembly (AN) voted in favor of the new proposed Law that will give the right to the government to nationalized the foreign oil service companies that are engage in services such as drilling, manage oil rigs, water injection into oil wells, compressing natural gas and management of docks and motor boats.

Companies like Halliburton co.and Schlumberger Ltd. are the likely candidates to either negotiate to form a force partnership with the venezuelan oil company PDVSA or be taken over. PDVSA owes the two companies more than $8 billion in unpaid bills.

Other companies like Helmerich & Payne Inc. and Ensco International Inc., engage in oil rigs operations are also likely to either agree to operate the rigs under a joint venture as minority stock holders with PDVSA or get their rigs expropriated.

The members of the AN will probably to approve the new law in the second discussionin the coming days. One of the main articles of the law would declare of "public interest" all goods and services related to primary hydrocarbon activities, a needed step before expropriation.

“The national executive would decree the total or partial expropriation of the activities or companies that carry out the aforementioned services,” Angel Rodriguez, an AN member and head of the congressional energy commission said on Tuesday.

"This allows the government to seize or nationalize all oil services companies or to create joint venture deals with those firms," Rodriguez, added.

The AN is totally under control of President Chavez, and the vast majority of the members fully support the president's proposals, so passage of the proposal is likely to be just a rubber stamp of the executive proposal.

 

Story by Elio Ohep, editor @petroleumworld.com, 58 212 635 7252, Caracas.
Petroleumworld 05/04/2009

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