Venezuela extends Orinoco oil takeover deadline

CARACAS, Feb 27 (Reuters) Venezuelan President Hugo Chavez extended by several months a deadline to take over multibillion-dollar crude operations run by major foreign oil companies in the Orinoco oil reserve.

Chavez, who has been on a nationalisation drive this year after a landslide reelection in the OPEC nation, previously vowed to take state control of the projects by May 1 but faced resistance from the companies -- some of the world's largest.

After quickly fulfilling pledges this month to take over the country's largest private companies in the telecommunications and electricity sectors, Chavez yesterday delayed his plan for grabbing stakes of at least 60 per cent in the crude upgrade operations.

On his nightly radio talk show, he said the companies had four months to agree the terms and conditions of the nationalisations and that it would then take another two months for the deals to be presented to the legislature for approval.

''We will give them four months,'' he said.

Chavez boasts he is anti-US and anti-capitalist despite being the United States' No 4 oil supplier.

He said he ordered the new timeline in a decree, something he can now do after lawmakers this year empowered him to issue laws without their consent.

Companies whose investments are targeted for takeover in the vast Orinoco reserve of tarry crude include Chevron Corp, Exxon Mobil, Conoco Phillips, Norway's Statoil, Britain's BP Plc and France's Total.

Several of the companies had balked at the May 1 deadline, complaining it was difficult to reach an agreement over the complex facilities in such a short time -- especially because they had hardly begun negotiations.

TIMELINE THREAT The companies had nevertheless taken the May 1 deadline threat seriously and expected some concrete government action by then, one industry source said.

Chavez has taken majority control in other privately run oil projects, albeit much smaller ones, by setting a deadline and sticking to it, noted the source, who asked not to be further identified because he was not authorized to speak for the record.

But this time the stakes are higher.

With an estimated value of more than 30 billion dollars, the four Orinoco projects have a production capacity of around 600,000 barrels per day.

A senior Venezuelan oil official has acknowledged the country could face hundreds of millions of dollars in penalties if it takes over the projects because of financing agreements with international banks.

The nationalisation moves have sparked accusations that Chavez, a close ally of Iran, is trying to model Venezuela on the economic system of his Communist mentor, Cuban President Fidel Castro.

Chavez is seeking a single party to steer his self-styled revolution, is denying an opposition television channel a license, wants to revoke central bank autonomy and targets an end to limits on reelection.

But he denies charges that he is a despot in the making, saying he will always allow opposition parties and will step down if he loses an election.

REUTERS SBA RN0712