Alexa

Law would let Venezuela take over oil contractors

Law would let Venezuela take over oil contractors

The National Assembly gave preliminary approval Tuesday to legislation that would let President Huge Chavez's government seize control of some oil service companies without following usual legal procedures for expropriating private businesses.
State oil company Petroleos de Venezuela SA, or PDVSA, has clashed in recent months with domestic and foreign firms over their fees for providing equipment and services to help extract crude. PDVSA wants to slash those costs 40 percent because its revenues have plunged due to the fall in oil prices, and it says some contracts are now overvalued.
Under Chavez, Venezuela has nationalized four major oil projects as well as foreign-owned steel and cement companies in the past two years.
The draft law would let the state oil company impose its control over some service businesses without further legal measures, while any disputes would be settled in court. Expropriations normally take effect only after the publication of a presidential decree in the Official Gazette or if the National Assembly approves a measure.
"PDVSA is progressively assuming control of all of these activities," Chavez said in a televised speech.
With the National Assembly dominated by Chavez allies and expected to give final approval in the coming weeks, the law would let the federal government "declare the expropriation, total or partial, of companies' goods or shares that provide the referred services." It says the owners could be paid in cash or securities.
The draft law says workers at affected companies could be offered employment at PDVSA.
In March, Chavez said his government would create several state companies to replace oil service contractors now doing business with PDVSA, saying Venezuela would "make the laws that need to be made." He said his administration would work with state governments to create "substitute companies" and "eliminate the intermediaries."
The companies covered by the legislation provide such services as natural gas compression, the injection of natural gas or water into oil fields to improve recovery, and management of docks and boats on western Lake Maracaibo.
Venezuela relies on oil for 93 percent of its export revenue and has seen world oil prices slide 63 percent since their July peak.
PDVSA has fallen behind on billions of dollars owed to contractors, including U.S. oil driller Helmerich & Payne. The Tulsa, Oklahoma-based company has halted seven of its 11 oil rigs in Venezuela this year, saying PDVSA owes it $116 million.


Updated : 2020-11-30 22:14 GMT+08:00