Chavez To Seize Some Oil Contractors Under New Law

RACHEL JONES

CARACAS, Venezuela (AP) — President Hugo Chavez said his government will begin seizing control of some oil contractors on Friday following the National Assembly's approval of a law that paved the way for the takeovers.

The law approved by the largely pro-Chavez assembly on Thursday enables state oil company Petroleos de Venezuela SA, or PDVSA, to take over contractors without following the usual procedures to expropriate business.

"Tomorrow we'll start recovering the goods and assets that will now belong to the state," Chavez said in a televised speech late Thursday after the legislative vote.

He said PDVSA will seize 300 boats as well as dozens of docks and other transportation installations in western Lake Maracaibo on Friday, and absorb the 8,000 workers affected.

Venezuela's state oil company has recently clashed with domestic and foreign service providers that help extract the OPEC nation's heavy crude, accumulating billions of dollars in debts as it aims to renegotiate contracts to reduce costs by 40 percent.

PDVSA says some of those contracts are now overvalued due to falling crude prices that have shrunk government revenue. Venezuela relies on oil for 93 percent of its export income, but has seen world oil prices slide 61 percent since their July peak — to settle at $56.71 on the New York Mercantile Exchange on Thursday.