Energy Minister Rafael Ramirez told a Venezuelan newspaper earlier this week that South America's No. 1 petroleum exporter would be taking over the projects "that in the past were handed over to multinationals to control."

"These companies demand huge amounts of money for use of this machinery. We have decided to nationalize this equipment to put them under state control," said Ramirez, who is also the head of PDVSA.

Ramirez and other PDVSA officials did not say which companies were operating the rigs being nationalized, nor did they provide a timetable for the takeover.

He also noted that Venezuela would be purchasing 13 new oil rigs in the coming months from a Chinese supplier, drawing relations between the two countries closer still.

Over the past several years, Venezuelan President Hugo Chavez has worked steadfastly to improve ties with China, particularly when it comes to oil.

In August 2006, he traveled to China to finalize a deal with Beijing for the construction of 24 drilling rigs in Venezuela and the purchase 18 oil tankers with a $1.8 billion price tag.

Earlier that year, he said Venezuela would like to increase oil sales to China to 300,000 barrels per day by the end of the year. Other officials in Venezuela said the increase would reach 200,000 bpd, up from the current 150,000 bpd.

Since assuming office in 1998, Chavez has courted China and other markets like India and even expressed willingness to sell fuel to North Korea. He has also cultivated closer ties with Iran, drawing sharp criticism from the United States, Venezuela's No. 1 oil export market, and increased concerns about the foreign policy leanings of the Venezuelan president.

More recently, Chavez appeared keen on weaning Venezuela from its petroleum industry's dependence on Western energy firms operating in the country, using a far-reaching campaign to gain majority control in the energy sector to ostensibly add more oil and gas profits to state coffers.

On May 1, Venezuela assumed majority control over the oil-rich Orinoco Belt, where several foreign energy firms invested millions.

The takeover stipulates that PDVSA has at least a 60 percent share of the projects pumping heavy crude that were once dominated by BP PLC, Chevron and Total SA of France. Those firms and others would be given fair market value for controlling interest of the projects, Chavez said.

Only ConocoPhillips did not sign a majority takeover agreement by the deadline, prompting Ramirez to threaten the company with expulsion without compensation.

Last week, Venezuela hit the Houston-based company with a hefty bill for back taxes totaling $465 million on a project co-owned by ConocoPhillips and PDVSA.

ConocoPhillips also owes $50 million in back taxes on another project, said energy officials. Both bills are said to date back to 2003-2005.

U.S. firm Chevron Corp. was also hit with a bill for back taxes totaling a reported $29 million.

ConocoPhillips' insistence on holding out against Venezuela's takeover has irked energy officials and could have led to last week's back-tax bills, observers said. Meanwhile, officials at ConocoPhillips refused to speculate on the delay in negotiations when questioned by United Press International.

ConocoPhillips spokesman Charlie Rowton told UPI last week that talks between the company and officials in Caracas are ongoing and being conducted "at the highest levels."

"We're continuing to discuss the matter in hopes of reaching resolution," he said at the time.

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