Nationalization of Energy Assets Continues in Venezuela: Oil Rigs Switch From Private to Public Hands

The nationalization of the Venezuelan energy industry continued apace recently as the government nationalized 11 oil rigs owned by Helmerich & Payne, Inc., a Tulsa-based contract drilling company.

As reported by the Financial Times ("Venezuela to Nationalize U.S. Oil Rigs," June 24, 2010), "Battling a fall in oil output and rising inflation, [President Hugo] Chavez's government has been tightening its grip over the economy in recent years -- nationalizing electricity...companies" among other industrial firms. The government's response was that the taking was necessary because Helmerich was not willing to discuss its relationship with the national oil company.

What this event underscores is the importance of keeping close track of national policies as companies look for investment opportunities. On-going vigilance by counsel and consultants is necessary in an age where an investment might be privately owned one day and publicly owned the next.