* Venezuela military takes over some oil service companies
* Opens door to takeovers of major oil contractors
* Williams Companies Inc likely directly affected
(Recasts with first takeovers, changes dateline, byline)
By Manuel Hernandez
MARACAIBO, Venezuela, May 7 Venezuelan soldiers
on Thursday took control of boatyards and other assets
belonging to oil service companies in the latest step by
socialist President Hugo Chavez to tighten his grip on the
Earlier in the day, Venezuela's legislature approved a law
allowing the nationalization of a group of oil service
companies. Chavez said the takeovers would quickly start in the
Lake Maracaibo oil heartland in the western state of Zulia.
"Tomorrow, we will start to recuperate assets and goods
that will now belong to the state, as social property, as they
should always have been," Chavez said, adding that thousands of
workers would be taken on by state oil company PDVSA.
But members of a Zulia business group that represents local
oil firms told Reuters soldiers seized the installations of 20
companies on the eastern side of the lake late on Thursday.
The law makes it easier for the government to later seize
assets owned by service giants such as Halliburton (HAL.N) and
Schlumberger (SLB.N) as state oil company PDVSA builds up
billions of dollars in debts with contractors amid low oil
The socialist president nationalized oil projects worth
billions of dollars two years ago and is now moving against
smaller service companies that the government has struggled to
pay as crude revenues fell in recent months.
It will directly affect natural gas producer Williams
Companies Inc (WMB.N), which runs a key facility that boosts
output of some of Venezuela's most valuable crude and which
last month took a $241 million charge for PDVSA nonpayment.
The move could lead to further declines in the OPEC
nation's oil production by risking slowdowns in key services
following years of underinvestment by PDVSA, which bankrolls
the social programs that keep Chavez popular.
"This seems like it's an easy way out of this current debt
dispute with service companies but it's a short-sighted
approach," said Antoine Halff, vice president of research at
the Newedge Group brokerage in New York.
"First, there are questions about how well PDVSA can run
those services companies, but there are also questions of how
this will affect future investment in oil projects," he said.
The law puts the state in charge of companies providing a
range of services including gas and water reinjection and
marine transport in Lake Maracaibo and gives PDVSA the right to
take over companies involved in those operations.
The law will let the government expropriate companies and
compensate firms with bonds instead of cash, order preliminary
takeovers of service company assets while courts settle
disputes and possibly annul existing contracts.
STATE RUN SERVICE COMPANIES
Other oil service companies in Venezuela which include
Baker Hughes (BHI.N) and BJ Services BJS.N.
"A sector as important as oil cannot be subject to the
whims of private companies, it must be subject to the control
of the state," Energy Minister Rafael Ramirez told reporters on
He said the government would release a list of which
companies would be taken over under the legislation, adding
that Williams Companies was "within the reach of the law".
The move appears targeted at specific service companies
that have been hampered by severe cash flow problems due to
lack of payment by PDVSA, which as of last year owed some $8
billion to contractors and providers.
Debts with Williams Companies are becoming increasingly
evident and Lake Maracaibo transport companies have faced
repeated strikes by unpaid workers
But representatives of larger service companies worry the
measure will eventually extend to them as well.
"The way the law is written, it's obvious they can take our
assets whenever they want," said an executive from a major
service company who asked not to be identified. "The
confiscatory nature of it is very alarming."
The state will now have the option to take over service
companies in the areas mentioned in the same way it
nationalized four multibillion dollar oil projects in the
Orinoco belt in 2007.
(Reporting by Brian Ellsworth; Editing by Clarence Fernandez)