Engineering News

Venezuela says will nationalize whole energy sector
Sat Jan 13, 2007 9:56pm ET

CARACAS, Jan 13 (Reuters) - Venezuelan President Hugo Chavez said on Saturday the country's entire energy sector had to be nationalized, reinforcing his socialist revolution and possibly giving himself more targets for state takeover.

But he said he would permit foreign firms to hold minority stakes in energy deals.

The anti-U.S. leader, in power since 1999, announced this week he would nationalize power utilities and the country's biggest telecommunications firm, confirming his status as the catalyst of Latin America's swing to the left.

"We have decided to nationalize the whole Venezuelan energy and electricity sector, all of it, absolutely all," Chavez said in his annual state of the nation address to parliament, potentially opening up more projects for state acquisition in the No. 4 crude exporter to the United States.

Chavez's growing control of Venezuela's economy is accompanied by his political influence. After the opposition boycotted elections, he has 100 percent support in parliament and dominates the judiciary.

The president was reinaugurated this week for a term that runs through 2013, and has said only his supporters can work in the army and huge oil industry. He uses his presidency to spar with Washington, which he accuses of bloodthirsty imperialism.

Chavez is a close ally of Cuba and Iran, whose president, Mahmoud Ahmadinejad, visited Venezuela on Saturday. Chavez said Venezuela and Iran agreed to push for a cut in world oil supplies to counter plunging prices.

Chavez has already pursued oil and gas projects and power utilities but left no leeway on Saturday for a private company to hold a majority in operations anywhere in the energy sphere.

WHAT WILL BE TARGETED?

It was not immediately clear whether his pronouncement on nationalizing the whole sector was a precursor to moves against specific projects or companies.

Venezuela will have to judge how closely private firms must be connected to the country's oilfields, refineries, pipelines, gasoline stations and coal mines to count as targets for nationalization.

Huge oil service companies such as Halliburton and Schlumberger operate in Venezuela but Chavez gave no indication whether deals involving such businesses were in his sights.

In his address to parliament, Chavez also said Venezuela was "almost ready" to take over the foreign-run oil projects of the Orinoco Belt, which produce about 600,000 barrels per day.

Later in the day, Eulogio del Pino, a senior oil official, confirmed the process of taking over the projects would accelerate in the coming months.

Those projects, which turn tarry, heavy crude into fuel, are run by foreign heavyweights such as Chevron, Conoco Phillips, Exxon Mobil, Statoil, and BP.

Chavez confirmed such firms could stay on as minority stakeholders after the state had acquired 51 percent.

"If someone wants to stay on as our partner, then the door is open but if he does not want to stay as our minority partner then hand me the field and goodbye," he said.

Despite his conviction Caracas was on the verge of taking over those projects, the country has faced a long battle wresting control from the foreign firms.

A senior Venezuelan oil official acknowledged last month the country could face hundreds of millions of dollars in fines if it takes over the projects, because of financing agreements with international banks.

Source: Reuters

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