Venezuela's Government Seizes US-Owned Oil Rigs

[Eugene]

Source: Associated Press (Yes, I know their stance of Venezuela.)

Venezuela's Government Seizes US-Owned Oil Rigs

CARACAS, Venezuela November 2, 2013 (AP)
By JOSHUA GOODMAN Associated Press

Venezuela has quietly seized control of two oil rigs owned by a unit of Houston-based Superior Energy Services after the company shut them down because the state oil monopoly was months behind on payments.

The seizure took place Thursday after a judge in the state of Anzoategui, accompanied by four members of the local police and national guard, entered a Superior depot and ordered it to hand over control of two specialized rigs to an affiliate of PDVSA, the state-owned oil producer.

PDVSA justified the equipment's expropriation, calling it essential to the South American nation's development and welfare, according to a court order obtained by The Associated Press. Company workers were instructed to load the rigs, known as snubbing units and used to repair damaged casing, onto trucks to be deployed at "critical wells" elsewhere, according to the document.

"It was like a thief breaking into your house, asking for the keys to the safe and then expecting you to help carry it away," Jesus Centeno, local operations manager for Superior in the city of Anaco, said by phone. "Their argument was that we were practically sabotaging national production."

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Read more: http://abcnews.go.com/International/wireStory/venezuelas-government-seizes-us-owned-oil-rigs-20761636

[Socialistlemur]

1. This will accelerate the flight of foreign companies from Venezuela

Given the serious delays in payments by PDVSA (they are said to owe $5 billion or more to the service sector), actions such as this will drive more companies to flee Venezuela, and this will in turn lead to these results:

1. We should see a gradual reduction in oil and gas production.

2. Any foreign service provider still in Venezuela will stop stocking spares

3. Foreign providers coming into the country will charge extra to cover the nonpayment risk

4. Equipment brought into Venezuela will be old, outdated and junk just in case they decide to steal it.

5. Small specialty firms will no longer be interested in working for PDVSA

6. The larger outfits will gradually reduce their activities and start pulling out.

This has been going on, and it's one reason why Venezuela's oil production is down and why they have a natural gas shortage (right now they import natural gas from Colombia).

In conclusion, it's another example of the legal chaos which reigns in Venezuela and the reason why Venezuela has gradually lost its economic strength, has very high inflation, and has already defaulted a bond issue last July. They are broke.

[Bacchus4.0]

2. it would be like a renter not paying you and then taking your house n/t

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