TWO Venezuelan oilfields operated by Total and ENI were seized yesterday by the Venezuelan state oil company, in an escalation by the Government of Hugo Chávez of its dispute with foreign oil producers.

The forced nationalisation of the ENI and Total operations follows the companies’ failure to agree to new contracts, which would have meant the loss of 60 per cent of their interest in the oilfields. Sixteen foreign oil producers signed the new contracts on Friday after a lengthy campaign by President Chávez to “recover sovereignty in the management of our oil business”.

ENI said yesterday it had been told by Petróleos de Venezuela (PDVSA) that its operating service contract in the Dacion area had been “unilaterally terminated” with all managements transferred to PDVSA personnel.

The Italian energy company, which produces 63,000 barrels per day from the Dación oilfield, protested about the handover but said that it would comply “in a professional way and at an agreed time”.

“ENI believes that this action by PDVSA is a violation of ENI’s contractual rights,” the company said yesterday, indicating that it would take legal action if reparation was not agreed with PDVSA.

Total did not comment yesterday on the takeover of the Jusepín field, where it produces some 30,000 barrels per day.

Venezuela’s oil minister last week stepped up the rhetoric against foreign oil multinationals, suggesting that ExxonMobil was not needed and should leave the country if it was not prepared to adjust to the new terms of business. Venezuela has been courting the Western oil industry’s rivals in Asia, including China’s National Petroleum Company and India’s Oil and National Gas Corporation.

Since he took office in 1999, President Chávez has sought to reassert state control over the country’s oil and gas industry, pursuing foreign operators for alleged tax evasion.

Last year Total was handed a $107 million (£60.3 million) tax bill and last month the tax authorities shut down the French company’s office in Venezuela for two days for alleged bookkeeping irregularities.

Under the new rules, PDVSA will retain a 60 per cent interest in each field and will control the boards of new joint ventures.

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