International energy service firm John Wood Group, of Aberdeen, reportedly stands to lose more than £100million as a result of Venezuela’s appetite for nationalising oil and gas business.
The figure appeared in several media reports yesterday, more than a month after the Press and Journal revealed the Venezuelan government had seized Wood Group assets in the South American country.
The north-east business was among numerous companies, including Halliburton, Schlumberger, Baker Hughes and Helmerich & Payne, which had work halted in the latest move by President Hugo Chavez to take control over oil and gas operations.
Wood Group has a 49.5% interest in the SIMCO consortium, which had a contract to manage water injection for the state oil company.
It is now thought the total value of the contract, said to be for 16 years, was worth nearly £500million, with about half of it left to run.
Losing the work, which was being carried out for state oil company Petroleos de Venezuela (PDV), is expected to cost Wood Group £104million.
Wood Group could not be contacted about the figures yesterday.
Dozens of oil companies are believed to be in a strong position to seek compensation from Venezuela after having their assets seized.
Wood Group became one of the latest casualties after Mr Chavez, a socialist leader who regularly castigates the US over its foreign policy, seized control of key assets in Lake Maracaibo as part of the nationalisation of service providers, including the port’s leading tug operators.
Private companies who operated in the region are said to be owed millions of pounds in unpaid debts since a collapse in oil prices last autumn.
Soldiers occupied key installations in Lake Maracaibo last month and PDV began to take control of a fleet of 300 supply boat crews, tugs and barges.
The military moved in after the approval of a new law paving the way for the widespread nationalisation of service providers to the energy sector in the world’s seventh largest oil exporter.
At the time, Wood Group said it may seek compensation from the Venezuelan government.
“We should be in a strong contractual position to recover money which is due,” a spokeswoman added.
Venezuela’s government said the move would see 8,000 workers incorporated into the ranks of the state oil company.