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Chavez to expand Venezuela oil nationalizations
CARACAS (Reuters) - President Hugo Chavez has already nationalized most of Venezuela's energy industry and is preparing to bring chemicals under his wing, but he may still target firms running gas and oil services.
A former soldier inspired by Cuba's Fidel Castro, Chavez has made energy nationalization the linchpin in his drive to build his own brand of socialism. He has also taken over assets in telecommunications, power, steel and banking.
Over the last month, Chavez has seized a gamut of mostly small oil service companies along with U.S.-owned gas compression units, adding to the mammoth heavy oil projects Venezuela took over in 2007.
The government is now mopping up what is left, preparing to take a majority stake in the OPEC nation's main private petrochemical projects and possibly eyeing natural gas.
But the really lucrative area of the oil business that Chavez has not yet touched is oil well services such as drilling rigs run by global giants like Halliburton (HAL.N), Schlumberger (SLB.N) and Baker Hughes (BHI.N).
"To the extent that the higher value service companies, the drilling companies, refuse to accept the terms that are on offer or refuse a write-down on their debt, they too will be vulnerable to a takeover," said Patrick Esteruelas of Eurasia Group in New York.
Chavez has not said the companies are in the spotlight but the government is committed to nationalizing all of what it considers strategic parts of the economy.
"We are determined to regain full petroleum sovereignty and it turns out that in Venezuela almost everything was privatized," Chavez told reporters in Argentina in May.
Halliburton and Schlumberger declined to comment about recent nationalizations, while Baker Hughes did not immediately respond to a request for comment.
These companies provide a range of services including exploration and enhancing output at existing fields. Their takeover could have repercussions in production and future investment in one of the world's major oil exporters.
Flush with oil cash, Chavez has often compensated nationalized companies fairly, but the 2007 takeovers in the oil industry led to lawsuits from ConocoPhillips (COP.N) and Exxon Mobil (XOM.N).
DEBTS, RISING OIL PRICES
State oil company PDVSA ran up $14 billion debts with all the service companies when oil prices plunged over the last year. Those debts preceded the takeover of smaller transport and water and gas injection firms in May. Companies that do not resolve disputes with PDVSA could be headed for trouble.
Oil prices have been on the rise in recent weeks and could provide a way for PDVSA to pay off its debts, or to pay for more takeovers. The service companies hit in May, including Williams Companies Inc (WMB.N), may be compensated with bonds rather than cash, according to Venezuela law.
Big players like Halliburton and Schlumberger have so far avoided public spats with the government over debts, but smaller companies such as driller Helmerich and Payne (HP.N) Ensco (ESV.N) have gone as far as to stop working rigs over fees in arrears.
Earlier this year, PDVSA seized a rig owned by Ensco and in May the U.S. company said it sought to terminate its contract in Venezuela.
Chavez's favored model for running nationalized industries is via joint ventures where the private partners have a 40 percent stake. He has used that arrangement for oil upgrading projects worth billions of dollars, as well as the steel industry.
The proposed law for petrochemical companies also limits private participation in projects to 40 percent, with the government taking its usual 60 percent stake.
The law should easily pass through the Chavez-ally controlled national assembly and could see reduced holdings for companies such as U.S. chemical maker FMC Corp (FMC.N). privately held Koch Industries and Japan's Mitsui (8031.T), Mitsubishi Corp and Mitsubishi Gas Chemical.
Such a model could be acceptable to oil service companies with a long-term view on Venezuela who want to keep close to some of the world's largest oil reserves, regardless of the current unstable business climate.
France's Total SA (TOTF.PA) and Norway's StatoilHydro (STL.OL) received around $1 billion of compensation after reducing their holdings in the 2007 takeovers. Britain's BP Plc (BP.L) and the U.S. company Chevron Corp (CVX.N) also remained as minority partners.
Venezuela's largely undeveloped natural gas sector is also ripe for a regulation shake up, since under the present law gas projects can be 100 percent privately owned, against the grain of Chavez's socialist ideals.
http://www.reuters.com/article/reutersComService_3_MOLT/idUSTRE55519L20090606

Gun in Mobile officer slaying stolen from deputy
(AP) — MOBILE, Ala. - Authorities say the gun 18-year-old Richard Hollingsworth is accused of using to shoot and kill off-duty Mobile Police Officer Brandon Sigler had been stolen from a sheriff's deputy in a car burglary.
Police Deputy Chief James Barber says three weapons were taken from the Mobile County deputy's car last year. He says two of the weapons have been recovered, including the gun used in the Siglar slaying Tuesday night. One other weapon, another handgun, is still out on Mobile streets.
When he was shot, Siglar was trying to disperse a late-night crowd and defuse an argument between two girls outside an apartment complex where he worked security.
http://www.al.com/newsflash/index.ssf?/base/national-22/1244117488150530.xml&storylist=alabamanews

U.S. spies for Cuba lured by cigar, stranger
WASHINGTON (AP) — For three decades, accused spies Walter Kendall Myers and his wife shuffled secrets to their Cuban contacts in such fear of being caught, authorities say, that he memorized top-secret documents rather than bring them into their home.
Their downfall came simply and swiftly, lured by a stranger who offered Myers a cigar.
Obama administration officials say Kendall Myers had access to highly sensitive material while working for the State Department's intelligence arm, and Secretary of State Hillary Rodham Clinton has ordered a damage assessment of what the couple may have revealed. Their methods of communicating with the Cubans included Morse code on shortwave radio, changing shopping carts at the grocery store and a face-to-face meeting with President Fidel Castro himself, court documents say.
David Kris, assistant attorney general for national security, described the couple's alleged spying for the communist government as "incredibly serious."
State Department officials say Kendall Myers had been under investigation for three years, since before he retired in 2007. The FBI made its move on him on April 15, on the street outside the Johns Hopkins School of Advanced International Studies in Washington, where he had gotten a doctorate and taught classes.
An undercover agent approached Kendall Myers, claiming to be an associate of his Cuban handler, according to a law enforcement official speaking on a condition of anonymity about the ongoing investigation. The agent offered Kendall Myers a cigar and birthday wishes since he turned 72 that day and proposed they meet at a Washington hotel later that night. The ruse worked, and Kendall Myers said he'd bring along his wife, Gwendolyn Steingraber Myers.
The Myerses had been out of touch with their Cuban handlers for a while, according to court documents. The couple reportedly told the agent they lived "in fear and anxiety for a long time" and feared Kendall Myers' boss had put him on a watch list in 1995. They said they were not interested in regular spying again but would help where they could, court documents say.
Authorities said over the course of three meetings with the agent in April, they shared their views of Obama administration officials who had recently taken over responsibility for Latin American policy and changing conditions in Cuba. They also accepted a device to encrypt future e-mail. The undercover agent proposed a fourth meeting for Thursday at a Washington hotel, where the couple was arrested.
The couple pleaded not guilty Friday in U.S. District Court to conspiracy to act as illegal agents and to communicate classified information to the Cuban government. Each is also charged with acting as an illegal agent of the Cuban government and with wire fraud. They are being held in jail until a detention hearing scheduled for Wednesday. Their attorney, Thomas Green, declined to comment.
The Myerses' arrest could affect congressional support for easing tensions with Cuba dating back to the Cold War. Two months ago, the Obama administration took steps to relax a trade embargo imposed on the island nation in 1962.
Court documents indicate the couple received little money for their efforts, but instead professed a deep love for Cuba, Castro and the country's system of government. The couple was planning a sailing trip to Cuba, which Myers considered "home."
The documents say Castro came to visit the couple in a small house in Cuba where they were staying in 1995, after traveling through Mexico under false names. Kendall Myers reportedly boasted to the undercover FBI agent that they had received "lots of medals" from the Cuban government.
The Myerses lived in a luxury co-op complex in Northwest Washington that over the years was home to Cabinet members, judges, congressmen and senators, including the late Barry Goldwater.
William Simpson, a security guard at the co-op, said the Myerses regularly asked him to clean their windows and would offer him something to eat or drink. "They treated me real nice," he said. "It shocked me when I heard" the news, Simpson said.
Kendall Myers was known by the Cubans as Agent 202, according to the indictment. His 71-year-old wife, a former bank analyst, reportedly went by both Agent 123 and Agent E-634.
The indictment says Kendall Myers disclosed to the State Department that he traveled to Cuba for two weeks in 1978, saying the trip was for personal and academic purposes. The next year, a Cuban government official visited the couple while they were living in South Dakota and recruited them to be spies, the indictment says. At Cuba's direction, authorities say, Kendall Myers attempted to get jobs that would give him access to classified information.
Court documents describe the couple's spying methods changing with the times, beginning with old-fashioned tools of Cold War spying: Morse code messages over a short-wave radio and notes taken on water-soluble paper. By the time they retired from the work in 2007, they were reportedly sending encrypted e-mails from Internet cafes.
The criminal complaint says changing technology also persuaded Gwendolyn Myers to abandon what she considered an easy way of passing information, by changing shopping carts in a grocery store. The document quoted her as telling the FBI agent she would no longer use that tactic. "Now they have cameras, but they didn't then."
Kendall Myers first worked for the State Department as a lecturer at the Foreign Service Institute and later as a European analyst in the department's intelligence arm, the Bureau of Intelligence and Research, from 2000 until his retirement in October 2007.
The indictment says in his last year of employment, Kendall Myers viewed more than 200 intelligence reports related to Cuba. Kendall Myers often took notes or memorized classified material to avoid the risk of removing the documents but concealed some documents he removed in a set of bookends, the court documents said.
http://www.usatoday.com/news/washington/2009-06-05-couple-spying_N.htm