Venezuela Seizes Oil Rigs Owned by US Company

Venezuela's government has seized control of 11 oil rigs owned by U.S. driller Helmerich & Payne, arguing that drilling had to be restarted after the company halted operations in response to delayed payments from the country's state oil company.

Hugo Chavez
Miguell Guitierrez | AFP | Getty Images
Hugo Chavez

Oil Minister Rafael Ramirez announced that Venezuela would nationalize the Tulsa, Oklahoma-based company's rigs. He said in a statement Wednesday that Helmerich & Payne had rejected government demands to resume drilling operations for more than a year.

Helmerich & Payne announced in January that it was halting operations on two of its drilling rigs, because Venezuela's state-run oil company, PDVSA, owed the company close to $100 million. It said it would halt the rest of its rigs by the end of July as contracts expired unless PDVSA began to make good on its debts.

Local Helmerich & Payne officials could not be reached.

Referring to Helmerich & Payne, Ramirez said: "There's a group of drill owners who have refused to discuss service prices and have preferred to have this equipment put away for a year."

Helmerich & Payne is not the only oil services company to have complained about a backlog in payments. Dallas-based Ensco Internationalsaid last year that it had suspended oil drilling operations off Venezuela's Caribbean coast because Venezuela owed it $35 million — prompting the state oil company — PDVSA — to take over the company's operations.

The government of President Hugo Chavez has nationalized dozens of privately owned companies in recent years as the socialist leader seeks to expand the state's role in the economy. Government critics and many business owners argue the takeovers violate private property rights.