Venezuela Pres. Chavez to seize some oil contractors under new law

ByABC News
May 8, 2009, 1:21 AM

CARACAS, Venezuela -- President Hugo Chavez said his government will begin seizing control of some oil contractors following the National Assembly's approval of a law that paved the way for the takeovers.

The law approved by the largely pro-Chavez assembly on Thursday enables state oil company Petroleos de Venezuela SA, or PDVSA, to take over contractors without following the usual procedures to expropriate business.

"Tomorrow we'll start recovering the goods and assets that will now belong to the state," Chavez said in a televised speech late Thursday after the legislative vote.

He said PDVSA will seize 300 boats as well as dozens of docks and other transportation installations in western Lake Maracaibo on Friday, and absorb the 8,000 workers affected.

Venezuela's state oil company has recently clashed with domestic and foreign service providers that help extract the OPEC nation's heavy crude, accumulating billions of dollars in debts as it aims to renegotiate contracts to reduce costs by 40%.

PDVSA says some of those contracts are now overvalued due to falling crude prices that have shrunk government revenue. Venezuela relies on oil for 93% of its export income, but has seen world oil prices slide 61% since their July peak to settle at $56.71 on the New York Mercantile Exchange on Thursday.

The companies covered by the legislation provide such services as natural gas processing, the injection of natural gas or water into oil fields to improve recovery, and management of docks and boats on Lake Maracaibo.

The law was approved by 153 lawmakers from Chavez's ruling party, while eight lawmakers voted against the measure and three abstained.

"It's fundamental that we control of all of this to guarantee the development of primary activities," Ramirez said in comments published by Venezuela's state-run Bolivarian News Agency.