Venezuela to nationalize 'absolutely all' energy sector

Chávez tells parliament: 'We have decided to nationalize the whole Venezuelan energy and electricity sector, all of it, absolutely all.'
January 13 2007: 3:55 PM EST

CARACAS (Reuters) -- Venezuelan President Hugo Chavez said on Saturday the country's entire energy sector had to be nationalized, reinforcing his socialist revolution and possibly giving himself more targets for state take-over.

But he said he would permit foreign firms to hold minority stakes in energy deals.
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Marc Weisbrot of the Center for Economic Policy Research discusses the situation in Venezuela. (January 10)
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The anti-U.S. leader, in power since 1999, this week announced he would nationalize power utilities and the country's biggest telecommunications firm, confirming his status as the catalyst of Latin America's swing to the left.

"We have decided to nationalize the whole Venezuelan energy and electricity sector, all of it, absolutely all," Chavez said in his annual state of the nation address to parliament, potentially opening up more projects for state acquisition in the No. 4 crude exporter to the United States.
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The president was reinaugurated this week for a term that runs through 2013.

Chavez has already pursued oil and gas projects and power utilities but on Saturday left no leeway for a private company to hold a majority in operations anywhere in the energy sphere.
What will be targeted?

It was not immediately clear whether his pronouncement on nationalizing the whole sector was a precursor to moves against specific projects or companies.

Venezuela will have to judge how closely private firms must be connected to the country's oilfields, refineries, pipelines, gasoline stations and coal mines to count as targets for nationalization.

Huge oil service companies such as Halliburton (Charts) and Schlumberger (Charts) operate in Venezuela but Chavez gave no indication whether deals involving such businesses were now in his sights.

In his address to parliament, Chavez also said Venezuela was "almost ready" to take over the foreign-run oil projects of the Orinoco Belt, which produce about 600,000 barrels per day.

Those projects, which turn tarry, heavy crude into fuel, are run by U.S. majors including Chevron (Charts), Conoco Phillips (Charts) and ExxonMobil (Charts), as well as European heavyweights such as France's Total (Charts), Norway's Statoil (Charts) and Britain's BP (Charts).

Chavez confirmed such firms could stay on as minority stakeholders after the state had acquired 51 percent.

"If someone wants to stay on as our partner, then the door is open but if he does not want to stay as our minority partner then hand me the field and goodbye," he said.

Despite his conviction that Caracas was on the verge of taking over these projects, the country has faced a long battle in wresting control away from the foreign firms.

A senior Venezuelan oil official last month acknowledged that the Caribbean state could face hundreds of millions of dollars in fines if it takes over the projects, because of financing agreements with international banks.