The Militant (logo)  

Vol. 71/No. 20      May 21, 2007

 
Venezuela gov't takes control
of oil fields in Orinoco belt
(front page)
 
BY OLYMPIA NEWTON  
May 8—At midnight on May Day, thousands of oil workers in Venezuela's Orinoco River belt celebrated as the Venezuelan government took over operational control of projects in the area. U.S. oil companies ExxonMobil and Chevron, as well as British Petroleum, France's Total, and Norway's Statoil, all complied with a February 26 decree by Venezuelan president Hugo Chávez giving the state oil company PDVSA at least a 60 percent share in operations there, effective May 1.

Texas-based ConocoPhillips, which has the largest holdings in the Orinoco belt of any foreign investors, has refused to sign an agreement giving PDVSA control of its shares there. "If this company, ConocoPhillips, or any other company does not accept the terms… they will have to leave the country," said Venezuela's oil minister Rafael Ramírez May 6.

Deposits in the Orinoco River basin consist of heavy crude oil, whose extraction and upgrading requires greater capital investments and technical expertise than conventional petroleum. The area holds the world's single largest known oil deposit, valued at more than $30 billion. Foreign companies have invested more than $17 billion in the projects since they began operations there in the 1990s, when Venezuela's state-owned oil industry was opened to private investment.

Negotiations between the Venezuelan government and foreign oil companies are slated to continue until June 26. On May 3, Ramírez told the media that the government would not compensate foreign companies in cash. Under the law, foreign investors may stay on and operate as joint ventures as long as PDVSA has a minimum 60 percent share.

Terms of the takeover also include freezing any layoffs of wage workers and placing them under the contract for PDVSA workers.

"Venezuela is exercising its right to administer its natural resources for the benefit of the people," Ramírez told a midnight rally of 40,000 on May Day at the José Antonio Anzoátegui Industrial Complex in the state of Anzoátegui.

Workers at the heavy crude refinery "exploded into a frenzied celebration after a New Year's Eve-style countdown, dancing until the early dawn hours," according to Reuters.

Last year, PDVSA took majority control of conventional oil operations. The government seized oil fields belonging to the Italian company ENI and the French Total when those companies refused to go along with the nationalization.

Since January, the Venezuelan government has taken majority control of the country's top private power company, Electricidad de Caracas, which previously belonged to a U.S. company; the main telecommunications company CANTV, a subsidiary of U.S.-based Verizon; and U.S.-based CMS Energy Corp's local electric company Seneca.

On May 3, Chávez said the government would nationalize Venezuelan banks and the Argentine-owned steel company Sidor if they did not begin prioritizing domestic needs. The month before, he warned cement companies that they would be nationalized if they worsened the country's housing crisis by favoring exports over domestic sales.  
 
 
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