Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, July 2 -- Venezuela has nationalized 11 oil rigs belonging to Tulsa-based Helmerich & Payne (H&P), making good on earlier promises to prevent international firms from “stymieing” the country’s production of crude oil (OGJ Online, June 25, 2010).
“We reviewed the report from the oil ministry and consider the decision pertinent,” said Jesus Graterol, president of the congressional energy commission, said on National Assembly television.
Rafael Ramirez, who serves as minister of oil and president of Venezuela’s state-run Petroleos de Venezuela SA (PDVSA), last week asked the National Assembly to take over the rigs after H&P declined to negotiate a new service contract, unlike other foreign firms.
Helmerich said the rigs were idled after Venezuela stopped paying for oil service activities and accumulated a debt of more than $40 million.
“This is a company which has refused to discuss the services contracts with [PDVSA]. Among the companies, only H&P has refused the conditions set by the Venezuelan law,” said Graterol.
In May 2009, the Chavez regime enacted a law that reserves to Venezuela certain assets and services related to hydrocarbon primary activities. Under the law, reserved activities are to be performed by PDVSA or its affiliates, or through mixed companies under the control of PDVSA or its affiliates (OGJ Online, June 5, 2009).
Since then, Venezuela has nationalized the assets of several US companies, including Exterran, which said that “on June 2, 2009, Petroleos de Venezuela SA, or PDVSA, commenced taking possession of our assets and operations in a number of our locations in Venezuela.”
Earlier, in 2007, Chavez forced international oil companies into joint ventures as minority partners, which landed him in international arbitration hearings with ExxonMobil Corp. and ConocoPhillips, which rejected revised terms.
Graterol’s justification of the seizure of H&P’s rigs echoes similar remarks made by Ramirez last week.
“There are rig owners that have refused to discuss with PDVSA the payment rates for services and preferred to hide the rigs for a year in Anaco, Anzoategui state,” said Ramirez. "It's the specific case of H&P, a US multinational," he said.
Ramirez said "sectors opposed" to the Venezuelan government are trying to "stymie” the production of crude in the country, while PDVSA said that seizure of the H&P rigs “will foment national hydrocarbon production and strengthen the policy of full oil sovereignty.”
"Our workers are now in control of the rigs," said Ramirez, who noted that Chevron Corp. could also lose up to five rigs. "We are not going to let the private companies stop work or boycott in any way our oil operations."
The US government earlier said Venezuela must compensate H&P if its seizure of the rigs goes through. "We would call on them if they did make such a move to compensate the owners of those wells," said Mark Toner, acting deputy spokesman at the US State Department.
In a terse rejoinder, PDVSA said it “categorically rejects the statements made by spokespeople of the US empire,” claiming that Washington was “trying once again to complicate relations with our partners."
Ramirez said H&P will be compensated for the rigs despite the firm’s “intransigent stand” in negotiating new fees and the only service company of 33 rig providers to refuse the terms offered.
Analyst BMI, which said Chavez’s seizure of the H&P rigs is the biggest expropriation of drilling machinery in years, criticized earlier claims by Venezuela that it had provided compensation for oil and gas industry assets it had nationalized.
“Plenty of firms have clearly yet to see any money, and could soon be bidding goodbye to their assets as well,” the analyst said.
Contact Eric Watkins at [email protected].