“We want to negotiate…but I have given instructions that on May first when the sun gets up, we will have all those oil fields under our control,” said Chávez in a subsequent press conference. “If someone does not agree, he has the right to go away…but we are going to respect their rights,” he said.

He went on to say that the companies “will accept this because we are going to continue being partners.” The outside companies will be allowed to invest as minority partners on joint ventures. “The company that wants to stay as our partner, we left the possibility open to them. The one that does not want to stay as minority partner, return the oil field and goodbye…good luck, thank you very much,” he said. Chávez also claimed that the process would allow “PDVSA, and therefore the nation,” to save some $6 billion.

The Orinoco Belt covers some 55,000 square kilometers and contains up to 1.3 trillion barrels of extra-heavy crude with an expected recovery of about 20 percent. If that rate is realized, an international certification of the Orinoco’s reserves, expected next year, could place Venezuela either equal to or surpassing Saudi Arabia with its 264 billion barrels of reserves. Production in the Orinoco is currently about 566,000 barrels per day of crude with an API gravity of 9. That oil is then upgraded to a much lighter 34 degrees API by heating and hydrogen injection. This is done at the petrochemical complex in Jose, about 250 kilometers east of Caracas.

At present, there are four major projects underway in the Orinoco, all of which are called “associations.”

- Sincor: Total, 47 percent, Statoil, 15 percent, and PDVSA, 38 percent.
- Petrozuata: ConocoPhillips, 50.1 percent, and PDVSA, 49.9 percent.
- Ameriven: ConocoPhillips, 40 percent, Chevron, 30 percent, and PDVSA, 30 percent.
- Cerro Negro: PDVSA, 41.67 percent, Exxon Mobil, 41.67 percent, and BP, 16.67 percent.

Rafael Ramírez, Venezuela’s energy minister, recently said that since he has been negotiating with the international companies for months, the nationalization should not be a “surprise for anybody.” Given that history, he said there is “no possible negotiation whatsoever. Nationalization will be implemented under a law, the draft of which has been completed.”

PDVSA, through its affiliate Venezuelan Petroleum Corporation, will also gain control of the oil firms involved in upgrading the Orinoco’s crude. Ramírez explained that the government’s goal is to standardize the upgrading operations and gain the means to better implement “governmental decisions, such as output cuts under OPEC.”

Although the Venezuelan oil industry was originally nationalized in the 1970s, Ramírez claimed that the move regarding the Orinoco was no more than a further nationalization because, in the past, neither the country’s constitution, nor the laws governing hydrocarbons, specifically defined control over the region.

The move by Chávez to take over the Orinoco was greeted with skepticism from the U.S. government. “This is a disturbing trend, far from the principles of transparency and open markets,” said Craig Stevens, a spokesman for the U.S. Department of Energy. Stevens said the move will be “to the detriment of the Venezuelan people, the long-term development of the country’s national resources, and ultimately, economic growth.”