Venezuela to Seize Foreign Oil Projects
CARACAS, Venezuela (AP) - President Hugo Chavez ordered by decree on Monday the takeover of oil projects run by foreign oil companies in Venezuela's Orinoco River region.
Chavez had previously announced the government's intention to take a majority stake by May 1 in four heavy oil-upgrading projects run by British Petroleum PLC, Exxon Mobil Corp. (XOM
), Chevron Corp. (CVX
), ConocoPhillips (COP
) Co., Total SA (TOT
) and Statoil ASA. (STO
He said Monday that has decreed a law to proceed with the nationalizations that will see state oil company Petroleos de Venezuela SA, or PDVSA, taking at least a 60 percent stake in the projects.
"The privatization of oil in Venezuela has come to an end," he said on his weekday radio show, "Hello, President.""This marks the true nationalization of oil in Venezuela."
By May 1, "we will occupy these fields" and have the national flag flying on them, he said.
The law is expected to be published shortly in the government's official gazette, and the companies will have four months from then to negotiate terms and conditions with PDVSA to decide whether they will take part in new joint ventures as minority partners, Chavez said.
Chavez did not detail how the government will pay for its increased share in the projects in which the companies are estimated to have invested some $17 billion.
The government has compensated companies reasonably in recent weeks for nationalizations it has carried out in other sectors, but those agreements were for assets valued far less than the oil projects.
The Orinoco projects are the only oil-producing operations in the country remaining under private control, which Chavez called "disgraceful."
But he added that Venezuela doesn't "want the companies to go ... We just want them to be (minority) partners."
Private companies pumping oil elsewhere in Venezuela submitted to state-controlled joint ventures last year, and few resisted because they were reluctant to abandon Venezuela, which has the largest oil deposits outside of the Middle East.
Chavez has been given special powers by congress for 18 months to issue laws by decree in energy and other areas, which he has used to nationalize the country's biggest telecommunications company and electricity company in recent days. Chavez has justified the nationalizations as necessary to give the government control of sectors "strategic" to Venezuela's interests.
My Way News - Venezuela to Seize Foreign Oil Projects
Am sure these oil stocks will take a hit today.