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Chavez takes over Venezuela's last private oil fields, but seeks to entice Big Oil to stay
The Associated Press
Issue date: 5/2/07 Section: News
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 petroleum deposit.
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.
Chavez, a strident critic of the U.S. and a leader of the leftist movement in Latin America, traveled to the refinery for a ceremony with red-clad oil workers on May Day, the international workers' holiday. The military planned a fly-over by Russian-made fighter jets.
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, Massachusetts-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.
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.
Chavez, a strident critic of the U.S. and a leader of the leftist movement in Latin America, traveled to the refinery for a ceremony with red-clad oil workers on May Day, the international workers' holiday. The military planned a fly-over by Russian-made fighter jets.
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, Massachusetts-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.
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