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Venezuela to nationalize U.S. firm's oil rigs - Yahoo! News

Venezuela to nationalize U.S. firm's oil rigs

By Frank Jack Daniel Frank Jack Daniel Thu Jun 24, 8:36 am ET

CARACAS (Reuters) – Venezuela will nationalize a fleet of oil rigs belonging to U.S. company Helmerich and Payne, the latest takeover in a push to socialism as President Hugo Chavez struggles with lower oil output and a recession.

A former soldier inspired by Cuba's Fidel Castro, Chavez has made energy nationalization the linchpin in his 'revolution'. He has also taken over assets in telecommunications, power, steel and banking.

The 11 drilling rigs have been idled for months following a dispute over pending payments by the OPEC member's state oil company PDVSA. Oil Minister Rafael Ramirez said on Wednesday the rigs, the Oklahoma-based company's entire Venezuelan fleet, were being nationalized to bring them back into production.

Ramirez said companies that refused to put their rigs into production were part of a plan to weaken Chavez's government,

"There is a group of drill owners that has refused to discuss tariffs and services with PDVSA and have preferred to keep this equipment stored for a year," Ramirez told reporters in the oil producing state of Zulia. "That is the specific case with U.S. multinational Helmerich and Payne."

The company was not immediately available for comment.

Chavez, who faces legislative elections in September, often pushes ahead with radical plans during election campaigns.

The 55-year-old leader is having a hard time in his 11th year in power. Venezuela's economy is the worst performing in Latin America this year, a problem exacerbated by a drop in oil output since 2008, power outages and soaring inflation.

NO SURPRISE

The takeover of Helmerich and Payne's rigs was not a surprise, considering Chavez penchant for nationalizations and the company's refusal to work before being paid the $49 million it has invoiced PDVSA.

Helmerich and Payne is a small player in the drilling industry, but global giants like Halliburton, Schlumberger and Baker Hughes also have a presence in Venezuela.

Halliburton and Schlumberger have avoided public spats with the government.

Chavez has kept pressure up on the private sector in recent months, blaming a "parasitic bourgeoisie" for Venezuela's recession and 30 percent annualized inflation,

He has threatened to nationalize Polar, the top brewer and food processor in the country of 30 million. The government has also seized a bank belonging to an owner of the leading opposition TV station and put an arrest warrant out for his partner, who is now on the run.

Chavez in 2007 nationalized multi-billion dollar projects in Venezuela's vast Orinoco oil region, persuading companies such as BP Plc, to accept minority stakes in facilities they had built.

Last year he ordered the takeover of dozens of smaller oil service companies as PDVSA, reeling from a sharp plunge in oil prices, struggled to pay contractors.

When he was flush with oil cash during a boom in oil prices that ended in 2008, Chavez often compensated nationalized companies fairly, although the 2007 takeovers led to lawsuits from ConocoPhillips and Exxon Mobil.

More recently Venezuela has been slower in paying compensation.

(Reporting by Patricia Rondon, editing by Jackie Frank)