Venezuela says paying debts to oil contractors

CARACAS (Reuters) - Venezuela's PDVSA will immediately pay off debts built up in recent months to thousands of local service companies and contract workers, the state oil company said on Sunday.

PDVSA has fallen behind with millions of dollars in payments to third party companies because of the sharp drop in oil prices since July last year. It has clashed with some providers as it tries to renegotiate contracts to reflect the new prices.

"We will immediately honor our obligations to 90 percent of the providers and contractors," PDVSA said in a statement on its website, adding that those benefiting from the payment program included cooperatives and companies that offer health services to its workers.

Oil Minister Rafael Ramirez emphasized that PDVSA was trying to strike new payment deals with service companies.

"We are not going to cancel our projects, we are just revising five year contracts because these tariffs cannot be maintained," he said in the statement.

(Reporting by Fabian Cambero; Writing by Frank Jack Daniel; Editing by Michael Urquhart)