Two Oil Fields Taken Over by Venezuela

Venezuela said Monday that it assumed control of two oil fields operated by Total of France and Italy’s Eni and vowed to win any international legal claims triggered by the takeovers.

The move came after the two companies failed to reach an agreement with the government to transfer their operating contracts to new joint ventures, or mixed companies, giving state oil firm PDVSA a majority stake.

The takeovers are the latest measure by President Hugo Chavez’s government to strengthen state control over the energy sector since the left-wing leader declared last year that the 32 operating deals were illegal. Venezuela is the world’s fifth-largest oil exporter.

“It was not possible to reach an agreement,” Oil Minister Rafael Ramirez said at a news conference, showing a video of Venezuelan workers raising the nation’s flag at dawn Saturday over the Dacion field operated by Eni just hours after talks collapsed. “These two transnational companies are unwilling to conform to our laws.”

The Jusepin field, operated by Total, produces about 30,000 barrels per day, while Dacion pumps close to 60,000.

Eni said Monday that PDVSA violated its contract rights and said it would seek reparations and possible legal action.

Total said that Venezuela had not accepted its proposal, but Ramirez told reporters that the proposal had been inadequate. He said that Total called energy authorities 15 minutes before they were scheduled to sign the agreement to request a larger stake in the mixed company.

On Friday, 16 oil companies signed accords with Chavez, agreeing to convert their operating agreements into mixed companies that gave PDVSA at least 60% control over the operations.

The operating agreements were subcontracting deals under which private companies pumped about 500,000 barrels of oil a day for PDVSA.