Venezuela negotiating payment for oil takeovers

CARACAS, Venezuela - President Hugo Chavez's government said Wednesday it is still negotiating payments for more than 70 oil contractors nationalized two months ago as it moves to reduce costs and assert greater control over Venezuela's oil industry.

Oil Minister Rafael Ramirez said state-run Petroleos de Venezuela SA, or PDVSA, has not yet paid for the companies because it is still auditing them to establish a fair price. But he said PDVSA has absorbed nearly 7,000 of the 8,000 workers affected.

Under a law approved by the pro-Chavez National Assembly, the oil contractors could be paid in cash or bonds. Some operate boats or docks on western Lake Maracaibo, while others inject water or gas into oil fields to improve recovery.

Separately, dozens of former PDVSA contractors gathered in Caracas on Wednesday to demand the company rehire them, alleging PDVSA has refused to renew their contracts even as it takes on employees from newly nationalized companies.

"We are going to keep doing what we have to do to defend payments for our families," said Juan Grimont, 45, who tied himself to a cross to symbolize a crucifixion because he has gone two months without work.

PDVSA has refused to renew the annual contracts for 56 workers at a gas plant in eastern Venezuela, while reducing salaries for dozens of others, union leader Juan Carlos Ramirez said. He said PDVSA cited budget reductions as a reason for the alleged cutbacks.

Officials at the gas plant in Anaco, Anzoategui, could not be reached for comment.

The government is seeking to cut costs in the oil industry, which accounts for 93 percent of Venezuela's export revenue but has been hit by a 56 percent slump in world petroleum prices since last summer's peak.

PDVSA said earlier this year it had fallen behind on billions in payments to foreign and domestic oil contractors as it aimed to reduce costs by 40 percent. Debts that stood at $5.6 billion in June have prompted some oil drillers to halt operations.

PDVSA says it is now using the proceeds from recent bond sales to pay down those debts. Chavez, meanwhile, has promised Venezuela will not cut back on social activities funded by PDVSA that range from distributing food to training Olympic athletes.

The oil minister said PDVSA is "reorganizing" its operations on Lake Marcaibo by "reducing costs and opening installations for non-oil activities such as transporting food."

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