Nationalization of Venezuelan oil is now for real’
BARCELONA, Venezuela — President Hugo Chavez’s government took over Venezuela’s last privately run oil fields Tuesday, intensifying a power struggle with international companies over the world’s largest known single petroleum deposit.
Newly bought Russian-made fighter jets streaked through the sky as Chavez shouted “Down with the U.S. empire!” to thousands of red-clad oil workers, calling the state takeover a historic victory for Venezuela after years of U.S.-backed corporate exploitation.
“The nationalization of Venezuela’s oil is now for real,” said Chavez, who declared that for Venezuela to be a socialist state it must have control over its natural resources.
Chavez accused foreign oil companies of bad drilling practices due to their hunger for quick profits, and said Venezuela could sue them for causing lasting damage to oil fields.
Oil Minister Rafael Ramirez declared that the fields had reverted to state control just after midnight. State television showed cheering workers in hard hats raising the flags of Venezuela and the national oil company over a refinery and four drilling fields in the Orinoco River basin.
While the state takeover had been planned for some time, BP PLC, ConocoPhillips, Exxon Mobil Corp., Chevron Corp., France’s Total SA and Norway’s Statoil ASA remain locked in a struggle with the Chavez government over the terms and conditions under which they will be allowed to stay on as minority partners.
All but ConocoPhillips signed agreements last week agreeing in principle to state control, and ConocoPhillips said Tuesday that it too was cooperating.
Analysts say the companies have leverage because Venezuela’s state oil company, Petroleos de Venezuela SA, cannot transform the Orinoco’s tar-like crude into marketable oil without their investment and experience.
“They’re hoping … that as time passes Chavez will realize he needs them more than they need him,” said Michael Lynch, an analyst at Winchester, Mass.-based Strategic Energy and Economic Research. He predicted most oil companies — with the possible exception of Exxon Mobil — would stay.
Multinationals pumping oil elsewhere in Venezuela, one of the leading suppliers of oil to the United States, submitted to state-controlled joint ventures last year because they were reluctant to abandon the profitable operations.
Chavez says the state is taking a minimum 60 percent stake in the Orinoco operations, but he is urging foreign companies to stay and help develop the fields. They have until June 26 to negotiate the terms.
The stakes are high for both sides. The Orinoco River basin, though not yet fully explored, is recognized as the world’s single largest known oil deposit, potentially holding 1.2 trillion barrels of extra-heavy crude.