Venezuela's Chavez seizes oil service companies

By Daniela Garcia

CIUDAD OJEDA, Venezuela (Reuters) - Venezuelan President Hugo Chavez sent troops to seize oil service companies on Friday, tightening his grip on the oil industry as low crude prices pinch the OPEC nation's finances.

Chavez is a socialist and former soldier who has already nationalized large chunks of the OPEC nation's economy, including most of the energy sector and telecommunications companies.

Williams Companies (WMB.N) said the government seized two natural gas facilities in eastern Venezuela after building up millions of dollars in debts for services, adding it could demand payment through international arbitration.

Military vehicles rolled through the streets of Ciudad Ojeda, on the shores of oil heartland Lake Maracaibo, where the government seized hundreds of boats and shipyards after Chavez signed a law to nationalize a group of oil service companies.

"We have started to nationalize all these activities connected to oil exploitation," Chavez said from a confiscated boat sailing across the lake. "This is a revolutionary offensive."

Williams said the government took over the El Furrial and PIGAP II gas compression facilities, which are crucial for boosting the production of fields that produce Venezuela's most valuable crude.

Flush with cash amid an oil boom, the president in 2007 nationalized oil projects worth billions of dollars, leading oil giants Exxon Mobil (XOM.N) and ConocoPhillips (COP.N) to quit the nation and sue for compensation.

Crude revenues have fallen in recent months and Chavez is now moving against smaller service companies the government has struggled to pay. The new law gives the government the option to pay compensation in bonds rather than cash.