Venezuela Oil Workers Pressure Rig Companies As Woes Mount

Venezuelan President Hugo Chavez
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CARACAS (Dow Jones Newswires), Feb. 6, 2009

Oil workers aligned with the government of President Hugo Chavez are pressuring rig companies to continue drilling, despite the state's failure to pay for those services at a time of rock-bottom oil prices.

Unionized rig operators claim to have taken control of two drills idled by U.S. driller Helmerich & Payne Inc., and have vowed to take over the company's nine other rigs nationwide if they ever cease operating.

The Tulsa, Okla., company stopped its drills known as #113 and #135 after failing to agree on a new service contract with Petroleos de Venezuela SA, or PdVSA, earlier this year. Helmerich & Payne claims that PdVSA owes it $100 million in unpaid bills.

"The workers are in control of all 11 rigs and we've told PdVSA we will seize and operate them all ourselves if necessary," said Willf Rangel, president of FUTPV, an oil industry union that boasts 45,000 members. "We're waiting to see what PdVSA decides."

The state-owned oil company has said it is renegotiating contracts with service companies and drill operators and this also includes covering unpaid bills that in some cases go back six months.

Rangel insists that PdVSA has already offered to renew Helmerich's rig contracts at standing rates, but the driller refused. The roughly 500 workers that tend to Helmerich's drills around the country, Rangel said, have pressed the company to sign a new deal. Helmerich denied in a statement that any rigs are controlled yet by workers and said it would continue talks with the government.

Helmerich and PdVSA officials declined to offer details of the ongoing talks.

Rangel and the union members claim to have stopped the company from storing away the drills in its equipment zone, a common practice once a drill ceases operations.

Late last month, oil workers also helped PdVSA seize an offshore drill owned by Ensco International Inc., another U.S. drill firm, after the company halted work following failed talks to settle a receivable balance of $35.5 million.

Top service companies are also owed hundreds of millions of dollars by PdVSA, but the oil company has yet to pay off its debts despite recent promises by Oil Minister Rafael Ramirez to begin bill settlement this week.

Venezuela's oil company is facing financial troubles stemming from the dramatic oil price decline from its record highs last summer. The country's oil and products basket price has lost more than $100 since then and now sits at $37.95 a barrel.

Ramirez and top oil company executives are lately devoting time to Chavez's campaign push to scrap term limits in a referendum vote scheduled for Feb. 15. Most oil industry executives expect the government to postpone any and all major payments and decisions until after the election.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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