Venezuela to Seize 26 Oil Rigs, Equipment in Next Few Months

MARACAIBO, Venezuela Jun 13, 2007 (Dow Jones Newswires)

Venezuela will take back a total of 26 oil drills and related equipment in the next few months that had been leased to outside companies, an executive from state-owned oil company Petroleos de Venezuela, or PdVSA, said Tuesday.

"It's 26 (rigs) that we will be nationalizing that are now in the hands of third parties," Jose Luis Parada, general exploration manager for PdVSA's western division, said on the sidelines of the 18th Annual Latin American Petroleum Show in Maracaibo.

He said the move, which includes hiring the rig operators, will consolidate the government's hold on the oil business.

The government has allowed a number of contracts to lapse so it can regain control of this equipment, Parada said.

"So far some 10 rigs have seen their contracts expire, and we're in the process of hiring the staff (to operate that equipment)," he said.

Once these units fall back into the state's hands, contract workers will become part of PdVSA's payroll, according to Parada.

"More than 1,000 people will (join PdVSA)" once all 26 rig units are formally absorbed by the state oil company, Parada said.

The process is expected to take a few months.

"These people will begin to receive the benefits of serving as full-time workers," he said.

Last month, Oil Minister Rafael Ramirez announced that PdVSA would begin the process of what he called an oil rig nationalization. He initially said 18 rigs would be subject to a state takeover.

It is unclear which service companies will fall under this nationalization, and Parada declined to provide a list a names.

So far, PdVSA has 42 drills operating in the country's oil-rich western region, according to Parada, and has plans to up that figure to 46 by the end of the year.

The Andean country has lately cut oil production to comply with a decision from the Organization of Petroleum Exporting Countries. Figures from the International Energy Agency showed that Venezuelan output has fallen to 2.35 million barrels of crude a day, 1 million barrels less than what officials say they produce.

Copyright (c) 2007 Dow Jones & Company, Inc.


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