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US Sees Venezuela Nationalization Moving Forward January 23, 2007

Posted by notapundit in US News, World News.
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WASHINGTON (Dow Jones)–The U.S. expects Venezuelan President Hugo Chavez to move forward with his aggressive nationalization programs for the oil, natural gas and telecom industries, despite mostly rhetoric from the leader so far, Assistant State Secretary for the Western Hemisphere Thomas Shannon said Tuesday.

Speaking at the Center for Strategic and International Studies, Shannon said the State Department was willing to work with U.S. companies that have substantial interests in several of the companies and assets Chavez has said he is seeking to nationalize.

Ealier this month Chavez announced the state will take over the country’s leading telecommunications firm CA Nacional Telefonos de Venezuela (VNT), or CANTV, and the largest privately-held power firm, Electricidad de Caracas, or EDC.

U.S. telecommunications firm Verizon Communications Inc. (VZ) holds 28.5% of CANTV, while AES Corp. (AES), a large U.S. power company, has a controlling stake in EDC. Chavez has not specified how compensation will work for these U.S. firms.

“We are willing to work with these (U.S.) companies to make sure their rights and opportunities are respected,” said Shannon.

Asked to elaborate on what steps the U.S. government was prepared to take to help these companies, he declined but said many of them are “well practiced” and “have means available to protect their interests.”

On Sunday Chavez suggested he would nationalize CANTV before negotiating any kind of compensation for shareholders. The comments sent the company’s share price 17% lower on Monday in New York trading.

Some analysts have mentioned Venezuela’s U.S. refining affiliate Citgo Petroleum Corp. as an asset the U.S. could use to leverage compensation for U.S. investors, but Shannon declined to comment on this option.

“I won’t go there,” he said.

Chavez is also putting private oil operations under majority state control, affecting U.S. oil majors Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and ConocoPhillips (COP). These companies invested billions of dollars over the past decade to produce tar oil in eastern Venezuela, and Chavez is now demanding minimum equity stakes of 60% in each project for state-run Petroleos de Venezuela SA.

Venezuela is the fourth-largest supplier of U.S. oil imports.

By Ian Talley, Dow Jones Newswires

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