Venezuela Tightens Grip On Oil

Country Seizes Two Oil Fields From Foreign Companies

(CBS/AP)  President Hugo Chavez has tightened his grip on Venezuela's energy resources, following through on threats to punish international companies that resist government control of the nation's oil fields.

Venezuela seized two oil fields from France's Total SA and Italy's Eni SpA after the companies failed to comply with a government demand that operations be turned over to state oil company Petroleos de Venezuela SA, or PDVSA, Oil Minister Rafael Ramirez said Monday.

"Those two companies resisted adjusting to our laws," he said at a news conference. "Those fields return to total, absolute control by Petroleos de Venezuela."

Until PDVSA took control of the oil fields Saturday, Total and Eni had operated them under contract. Some other companies, including Exxon Mobil Corp., decided to sell their stakes among the 32 Venezuelan oil properties rather than go along with the new terms.

Ramirez, asked if companies that resist will be forced out of Venezuela, replied: "We don't have a veto against any company here." But he added: "Companies that don't adjust to our laws, we don't want them to continue in the country."

Venezuela's weekend seizures were the first as part of Chavez's effort to draw more revenue from companies pumping crude in the South American country.

Venezuela's increasing control over its oil reserves gives Chavez a large say in what oil prices will be worldwide this summer, said CBS News foreign affairs analyst Pamela Falk.

"The economics of Washington's strained relations with Venezuela could prove costly," Falk said.

Private oil companies had run 32 oil fields in Venezuela independently under contract with the government. But Venezuela demanded last year those contracts be changed into so-called "mixed company" joint ventures that give PDVSA a minimum 60-percent stake.

Many companies have accepted the new terms without a fight, apparently betting the ventures would still be profitable even with a larger share of revenue going to the state.

Venezuela has been emboldened to take a harder line due to rising oil prices, political instability in the Mideast and Nigeria, and new buyers in Asia. Light sweet crude for May delivery rose 11 cents to settle at $66.74 a barrel Monday on the New York Mercantile Exchange.

Ramirez said 20 companies, including Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum, representing 25 oil fields have signed on to the new legal framework to create joint ventures.