How about, Sayonara, Citgo?

After nationalizing the Helmerich and Payne oil rigs, Venezuela Defends Plans To Nationalize Helmerich’s Idled Rigs

Venezuela, facing criticism over its plan to nationalize 11 idled rigs owned by Helmerich & Payne Inc. (HP), said Friday the Tulsa-based company was the only one of 33 oil services companies that refused to renegotiate rates starting in early 2009, when oil prices were falling.

“Despite meetings with representatives and directors of H&P for nearly a year, it wasn’t possible to reach an agreement due to the inflexible position of the said company,” according to a statement from state oil firm Petroleos de Venezuela, or PDVSA.

Of the 32 companies that PDVSA successfully renegotiated terms with, 14 of them were local firms and 18 were foreign, PDVSA said.

Venezuela’s government, led by socialist President Hugo Chavez, this week announced plans take over the Helmerich rigs, and said that as soon as it does it will start using them to pump oil.

The rigs in question have been sidelined for more than a year. Helmerich turned them off because PDVSA owes it some $43 million for work the Oklahoma firm already performed. Helmerich says it wants to be paid first before turning them back on because it doesn’t aim to work for free.

Helmerich is also awaiting resolution of currency exchange issues with PDVSA, some which are related to the country’s January devaluation of the bolivar.

The U.S. State Department entered the fray Thursday, calling on Venezuela’s government to compensate U.S.-based drilling companies if it decides to nationalize rigs owned by them.

“We would just call on them to–if they did make such a move–to compensate the owners of those wells,” said State Department spokesman Mark Toner during a press briefing.

Of course, the PDVSA statement blamed “the empire::

“PDVSA categorically rejects the statements made by spokespeople of the U.S. empire,” PDVSA said. “It is trying once again to complicate relations with our partners.”

In this case, should “the empire” strike back? Gustavo Coronel explains the case for ending business with CITGO:

PDVSA has moved to expropriate eleven drilling rigs from this company in Venezuela, following a strategy that I consider suicidal. The strategy is as follows: when PDVSA owes contractors money that cannot pay, or does not wish to pay for whatever reason, then it simply expropriates the assets of the company, in order to delay payment indefinitely. This has been the case with companies expropriated in the past and seems to be the case with H&P.

But that was then and this is now. The move by PDVSA finds Venezuela in a weak position vis- a- vis the United States. Venezuela is no longer as important a supplier of oil to the United States as it was only ten years ago. Currently Venezuelan imports into the United States are barely at the million barrels per day level, a drop of some 300,000 barrels per day since Chavez came into power. More significant is the fact that gasoline exports from Venezuela to the U.S. have practically disappeared. The 2009 report on Petroleos de Venezuela shows that during last year it only exported some 99,000 barrels of gasoline per day. Even assuming that all of these barrels went to the United States, this would represent a drop of some 75 percent as compared to only a few years ago.

In fact, the volumes of Venezuelan oil coming into the U.S. could rather easily be replaced by modest increases of imports from the other top 15 suppliers of oil to this country, mostly from Canada, Saudi Arabia, Angola and Russia. This could be done at minimal disruption of the U.S. market, if Venezuelan aggressive actions against U.S. company assets continue or if Venezuela is designed as a new member of the group of rogue states that support international terrorism.

Of course, that would assume that the Obama administration has grown a pair.


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