Venezuela decrees expropriation of 11 rigs owned by US oil driller Helmerich & Payne

Chavez formalizes seizure of US-owned oil rigs

CARACAS, Venezuela — Venezuela took control of 11 oil rigs owned by U.S. driller Helmerich & Payne on Thursday after the company shut them down because the state oil monopoly was behind on payments.

The government’s “forced acquisition” of the rigs took effect with publication of President Hugo Chavez’s decree in the Official Gazette. Red-clad Chavez supporters celebrated the takeover in an outdoor rally in the town of Anaco, where some of the rigs are located.

Oil Minister Rafael Ramirez told the cheering crowd that the government “is taking control of this drilling company that has been nationalized by the revolution.”

He said the government decided to seize the oil rigs because Helmerich & Payne had left them idle for about a year.

“Those foreign investors simply decided … to halt their operations and leave in their facilities 11 rigs that we needed,” Ramirez said. “Primary oil production activities have to be continuous, and no one can stop them for any reason. … No one has the right to halt the country’s economic activity.”

Ramirez earlier defended the expropriation, telling state television on Wednesday that the Tulsa, Oklahoma-based company had refused to discuss rates for its drilling services. He said state oil company Petroleos de Venezuela SA, or PDVSA, is willing to discuss a fair price for the drills and if no agreement is reached, the matter will go to arbitration.

Helmerich & Payne has said it halted operation of some rigs because it simply wanted to be paid for its work.

The U.S. company announced in January 2009 that it was halting about four of its drilling rigs because PDVSA owed the company close to $100 million. Several months later it said more of its rigs were out of operation due to the unpaid debts.

The company said in a statement last week that PDVSA still owed it about $43 million as of June 14.

Other oil services companies have complained about delayed payments. Dallas-based Ensco International Inc. said last year that it had suspended drilling off Venezuela’s Caribbean coast because it was owed $35 million — prompting PDVSA to take over its operations.

Starting in 2008, PDVSA accumulated unpaid debts of about $7.5 billion to oil industry service contractors. The state oil company paid off more than $5 billion of those debts in 2009, partly relying on bonds to cover its obligations.