Venezuela Setting Up Oil Services Co, Tuesday August 14, 5:36 pm ET By Fabiola Sanchez, Associated Press Writer

Venezuela to Create State-Run Oil Services Company, 'Our Own Halliburton'
CARACAS, Venezuela (AP) -- Venezuela is creating its own oil-field services company to reduce dependence on foreign contractors, the country's top energy official said Tuesday.
Oil Minister Rafael Ramirez said the state-run oil company Petroleos de Venezuela SA, or PDVSA, is starting its own version of Houston-based Halliburton Co. to provide services within the oil-producing country.
"We're going to create our own firm, called PSVSA Services," Ramirez said during a televised interview. "We can have our own Halliburton, ours, the Boliviarian one."
President Hugo Chavez aims to make Venezuela 's oil industry self-sufficient as he advances his Bolivarian Revolution, a movement named after South American independence hero Simon Bolivar. PDVSA currently depends on foreign companies, including Halliburton and Schlumberger Ltd., to maintain petroleum production.
Ramirez said the new company would also offer services in other Latin American nations such as Colombia , Nicaragua and Ecuador .
PDVSA has declared an "operational emergency" due to an international shortage of oil rigs that has driven up costs and prevented it from hiring enough rigs for drilling.
Some industry watchdogs have said Venezuela 's crude output is falling, partly because of the rig shortage. The Paris-based International Energy Agency, for example, estimates that oil output in Venezuela has fallen to 2.37 million barrels a day, down from 2.6 million barrels per day a year ago.
But Ramirez denied that output was down: "Our production is not affected." He said the country, a major supplier of oil to the U.S. , is producing 3.1 billion barrels of oil a day.
Chavez's government has struck a deal with China National Petroleum Corp. to begin assembling drilling rigs in Venezuela , a major part of PDVSA's plan to gain its own rig fleet. Production of the rigs is expected to begin within two years.
Ramirez said Venezuela already has obtained 13 Chinese-made oil drills.
Dino Barajas, an analyst and partner in the corporate practice group at Paul Hastings LLP, said Venezuela could run into obstacles as PDVSA attempts to acquire drilling technology, but the country will ultimately gain more control over its industry.
"This could take several years to get a project like this off the ground, but in the long run it will help Venezuela protect its industry," Barajas said.