Venezuela: Congress wants heavy oil

Venezuela’s congress, dominated by supporters of President Hugo Chavez, released a report May 11 recommending the state assume majority control of key heavy oil projects run by companies like Chevron Corp. and Exxon Mobil Corp. in its oil-rich Orinoco River basin.

Such a move, which Chavez has yet to publicly endorse, would bring all active oil-producing operations run by foreign companies in Venezuela effectively under state control.

The development comes as Venezuela and Bolivia both advance a series of nationalist measures to increase state control over their oil and gas sectors. The moves, aimed at extracting a greater share of profits at a time of soaring oil prices, have rattled investors, strained some diplomatic ties and become a major issue at a summit of Latin American and European leaders meeting in Austria the week of May 8.

Venezuela’s pro-Chavez National Assembly wants state oil company Petroleos de Venezuela SA, or PDVSA, to take a majority stake in four projects in the Orinoco region just as it did earlier this year in 32 oil fields previously operated under contract by private companies. Those oil fields are now run as state-controlled joint ventures.

“The National Assembly does not accept that the (Orinoco oil) belt does not include majority state control over operations in the belt,” said the congressional report.

Oil Minister Rafael Ramirez said earlier in the week that while conditions were not in place for the government to make that move immediately, it was “evaluating” the situation and that eventually all oil operations would be brought under majority state control as required by a 2001 law. The comments had come as Venezuela announced a new tax targeting foreign companies.

—The Associated Press