Venezuela threatens to nationalize H&P-owned rigs

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 25 -- Venezuela’s Petroleos de Venezuela SA is seeking permission from the country’s National Assembly to seize control of 11 drilling rigs owned by Tulsa-based Helmerich & Payne.

“There are rig owners that have refused to discuss with PDVSA the payment rates for services and preferred to hide the rigs for a year in Anaco, Anzoategui state,” said Oil Minister Rafael Ramirez. “It's the specific case of H&P, a US multinational.”

Ramirez, who is also president of PDVSA, said “sectors opposed” to the Venezuelan government are trying to “stymie the production of crude in the country,” while PDVSA said that seizure of the H&P rigs “will foment national hydrocarbon production and strengthen the policy of full oil sovereignty.”

H&P said it idled the rigs due to “unpaid invoices corresponding to services rendered in prior years” and that that it would be “willing to enter new drilling contracts for drilling work in Venezuela if and when significant progress was achieved in terms of such receivable collections and currency conversion.”

According to H&P Chief Executive Officer Hans Helmerich, “Our dispute with PDVSA has never been very complicated and our position has remained clear: We simply wanted to be paid for work already performed. We stated repeatedly we wanted to return to work, just not for free.” 

“We have worked in Venezuela for 52 years and wanted to continue under reasonable conditions,” Helmerich said. “At the same time, H&P has reduced its number of rigs in Venezuela in half since 1998. At that point, almost 30% of our land rigs were in that country, as compared to under 5% of our land rigs today.”

The US government said Venezuela must compensate H&P if its seizure of the rigs goes through. "We would call on them if they did make such a move to compensate the owners of those wells," said Mark Toner, acting deputy spokesman at the US Department of State.

Toner said this latest move by President Hugo Chavez's government to nationalize assets of foreign companies “doesn't speak well or bode well for the investment climate” in the Latin American nation.

Contact Eric Watkins at

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