Venezuela boosts control over petrochemicals

  • Business
  • Wednesday, 17 Jun 2009

CARACAS: Lawmakers loyal to President Hugo Chavez gave final approval on Tuesday to a bill paving the way for Venezuela's government to take a minimum 50 percent stake in the country's petrochemical companies.

The legislation approved by the predominantly pro-Chavez National Assembly requires private firms to form joint ventures with the state, which would take a minimum 50 percent stake in the projects.

Venezuela's government "will have control over these companies," said Angel Rodriguez, president of the assembly's Energy and Mines Committee.

The newly approved legislation, he added, will create jobs and boost the aggregate value of our hydrocarbons.

The Philadelphia, Pennsylvania-based chemical maker FMC Corp., Colombia's state oil company Ecopetrol, Japan's Mitsubishi Corporation and LyondellBasell Industries of the Netherlands are among the foreign petrochemical companies operating in Venezuela.

Approval of the bill is Venezuela's latest initiative to increase the state's role in the economy as Chavez steers his country toward what he calls "21st-century socialism."

Chavez has nationalized major steel, cement, electricity and telecommunications companies in recent years.

In the last month, the government has seized dozens oil contracting firms including gas compression and water injection facilities, supply boats, drydocks and barges used in oil-rich Lake Maracaibo.

"The government is establishing a wider role for itself while allowing some room for private sector participation where it is absolutely necessary due to heavy need for investment and expertise," Patrick Esteruelas, an analyst with the Eurasia Group in New York, said in a statement released on Tuesday.

Critics warn Chavez is scaring off foreign investment.

Venezuela plans to invest $20 billion in its petrochemicals industry during the next four years, Rodriguez said. - AP

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