Chavez: Troops to escort oil takeovers

AP, April 12, 2007

CARACAS, Venezuela - President Hugo Chavez said Thursday that soldiers will accompany government officials when they take over oil projects in the Orinoco River basin next month.

Chavez has decreed that Petroleos de Venezuela SA, or PDVSA, will take a minimum 60 percent stake in four heavy-oil projects in the Orinoco River region and invited the six private companies operating there to stay on as minority partners.

"On May 1 we are going to take control of the oil fields," Chavez said. "I'm sure no transnational company is going to draw a shotgun, but we will go with the armed forces and the people."

The projects — run by BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips, France's Total SA and Norway's Statoil ASA — upgrade heavy, tar-like crude into more marketable oils and are considered Venezuela's most promising. As older fields elsewhere go into decline, development of the Orinoco is seen as key to Venezuela's future production.

Negotiations over the takeover have yet to yield an agreement and are expected to be difficult as the companies seek a deal that takes into account more than $17 billion in investments and loans related to the projects.

Chavez has been given special powers by congress for 18 months to issue laws by decree in energy and other areas, which he has also used to nationalize the country's biggest telecommunications company and electricity company.

Chavez has justified the nationalizations as necessary to give the government control of sectors strategic to Venezuela's interests.