The Venezuelan President is making good on his vow to regain state control over the country's oil richesRussian-made MiG fighter jets will swoop overhead and army troops will flank Venezuelan President Hugo Chávez when he takes over four heavy-oil projects from their foreign owners May 1. The staged theatrics by the fiery nationalist, including a rally by red-shirted supporters of Chávez's Bolivarian revolution, are aimed at driving home the message that Big Oil is no longer in charge in Venezuela.
Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP), BP (BP), France's Total, and Norway's Statoil (STO) had little choice but to turn majority control of their operations in Venezuela's oil-rich Orinoco River basin region to state-run oil company Petróleos de Venezuela (PDVSA). While most of the companies are expected to remain as minority partners, terms haven't been negotiated yet for compensation of the takeovers. Energy & Oil Minister Rafael Ramirez said last week that a final agreement might not come until late June. "I'm not sure that all the oil companies will stay," says Pietro Pitts, editor of Caracas-based Latin Petroleum magazine. "They are looking at the long-term and want some assurance that their contracts will be observed."
Chávez said on Apr. 29 that the takeovers represent the "last step" in his dogged efforts to regain state control over the country's oil riches. Venezuela, the world's fifth-largest oil producer, sells two-thirds of its production to the U.S., accounting for 14% of U.S. imports. "We are going to take over some oil fields that have continued to be in the hands of transnationals," Chavez said in a meeting of regional leaders.
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