Venezuela seizes oil rigs

Reuters:

Venezuela will nationalize a fleet of oil rigs belonging to U.S. company Helmerich and Payne, the latest takeover in a push to socialism as President Hugo Chavez struggles with lower oil output and a recession.

A former soldier inspired by Cuba's Fidel Castro, Chavez has made energy nationalization the linchpin in his 'revolution'. He has also taken over assets in telecommunications, power, steel and banking.

The 11 drilling rigs have been idled for months following a dispute over pending payments by the OPEC member's state oil company PDVSA. Oil Minister Rafael Ramirez said on Wednesday the rigs, the Oklahoma-based company's entire Venezuelan fleet, were being nationalized to bring them back into production.

Ramirez said companies that refused to put their rigs into production were part of a plan to weaken Chavez's government,

"There is a group of drill owners that has refused to discuss tariffs and services with PDVSA and have preferred to keep this equipment stored for a year," Ramirez told reporters in the oil producing state of Zulia. "That is the specific case with U.S. multinational Helmerich and Payne."

...

In other words, Chavez was trying to impose terms for operations that were not commercially reasonable and he then used their lack of agreement to those terms as an excuse to grab the hardware. There is little reason to believe he will be able to operate them successfully.

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