Global Processing

Venezuela to Nationalize US Oil Rigs

June 30, 2010
The Financial Times reports Venezuela is nationalizing 11 oil rigs belonging to U.S. driller Helmerich & Payne, the latest in a series of takeovers initiated President Hugo Chávez’s drive to create a socialist economy in the middle of a recession. The government has been tightening its grip over the economy in recent years – nationalizing electricity, steel and cement companies as well as a handful of banks. Chavez has also threatened to take over Polar, the nation’s top food producer. Helmerich & Payne, based in Tulsa, Oklahoma, had halted work on all 11 of its Venezuela rigs for months following an extended dispute with state-run Petroleos de Venezuela, or PDVSA, over payment. PDVSA racked up billions of dollars in debts with contractors last year as it renegotiated contracts in a bid to reduce costs by 40 percent. PDVSA had earlier taken over a rig owned by Dallas-based Ensco International after it suspended operations, saying it was owed $35 million. Other foreign rig operators, including Halliburton and Schlumberger, continue to work in Venezuela and maintain cordial relations with the government. Venezuela relies on oil for 95 percent of exports, but crude production has slumped slightly over the past two years.