CIUDAD OJEDA, Venezuela, (Reuters) – Venezuelan  President Hugo Chavez sent troops to seize oil service  companies yesterday, 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 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 and ConocoPhillips 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.

The move could lead to further declines in oil production  by risking slowdowns in key services following years of  underinvestment by state-owned oil company PDVSA, which  bankrolls the social programs that keep Chavez popular after a  decade in office.
The law makes it easier for the government to later seize  assets owned by service giants such as Halliburton and  Schlumberger as PDVSA builds up billions of dollars in debts  with contractors.

It appears to be targeted at specific service companies  that have been hampered by severe cash flow problems due to  lack of payment by PDVSA, which as of last year owed at least  $8 billion to contractors and providers.

Chavez told hundreds of oil workers dressed in the red  shirts that identify his supporters that the takeovers included  a water injection project part-owned by British company John  Wood Group.

Six people demonstrating near Maracaibo, across the lake  from Chavez’s rally, suffered gunshot wounds when an  unidentified gunmen fired on them, the investigative police in  Maracaibo said.

Wood Group said yesterday it was in a strong position to  extract compensation for the loss of its 49.5 percent interest  in a 16-year, $800 million contract in Lake Maracaibo.

According to Williams’ filings with the U.S. Securities and  Exchange Commission, it has three gas compressor facilities in  Venezuela with a net book value of $324 million.

Oil Minister Rafael Ramirez said the facilities help PDVSA  pump 500,000 barrels of crude per day from Venezuela’s best  quality fields in the eastern state of Monagas.

Other oil service companies in Venezuela include Baker  Hughes and BJ Services.