CARACAS (Dow Jones Newswires), May 6, 2009
New nationalization legislation now in the hands of Venezuelan lawmakers will impact the operations of some oil-services companies but will leave out rig firms and large well-service firms.
Oil Minister Rafael Ramirez noted Wednesday that firms such as Williams Co. (WMB), a U.S. firm that operates a high-pressure gas compression facility in Venezuela, could be affected by the new law, but noted that oil rig firms and large service firms such as Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) are not included.
"Oil rig firms are not included," Ramirez said. And oil-well services firms, "although very important...we have options. If we can't reach agreements with those firms we can always look elsewhere."
Ramirez noted that once the law is passed the ministry will list the companies that could be nationalized.
Members of the National Assembly on Tuesday approved the law in a first reading.
Lawmakers will have to approve the measure in a second discussion to make it official. As conceived, the law would declare of "public interest" those goods and services related to primary hydrocarbon activities. The declaration is necessary before expropriation.
These services would include water-, gas- and steam-injection technologies as well as the transport and other maintenance activities performed in the oil-rich Maracaibo lake, an area that has been rife with labor disputes of late.
Once the law is passed, Petroleos de Venezuela SA, or PdVSA, will be able to take possession of these activities.
The law establishes that compensation for these assets will be determined by book value of assets after deducting payroll costs, and will be payable in cash or government debt instruments, according to the document.
The congressional proposal comes at a time when PdVSA has struggled to pay local and foreign contractors for oil well services, such as drilling. The oil minister said, however, that PdVSA will continue to negotiate rates and outstanding bill amounts with these companies.
"As we have said before, we've found that we have found some excess charges" from these companies, he added.
Copyright (c) 2009 Dow Jones & Company, Inc.
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