Two foreign oil firms have failed to reach a deal with Venezuela to hand over control of their operations in the country as required under the government's nationalization effort. In Miami, VOA's Brian Wagner reports officials say Tuesday is the final day for negotiations with foreign oil firms.

Representatives of ConocoPhillips and ExxonMobil say they have not reached a deal to transfer at least 60 percent control of their operations to the government. Venezuela has been pressing all foreign firms in the nation to agree to new partnership deals that would place the government in control of the industry. Four other firms have struck a deal in recent weeks.

Hugo Chavez

Mr. Chavez has made the oil reforms the centerpiece of his plan to create a 21st century socialist revolution in Venezuela.

Venezuelan officials and company executives have released few details about negotiations for control of drilling equipment, infrastructure and improvements at oil sites across the nation.

David Pumphrey, senior fellow at the Center for Strategic and International Studies in Washington, says ConocoPhillips and ExxonMobil have billions of dollars invested in Venezuela. He says the failure of talks suggests that the two companies felt there was little to gain from a deal with Venezuela.

"To step away from that type of sunk investment, they must have felt that both the returns to them for the long run and also the prospect that this might not be the final stage [of nationalization], could have weighed into it as well," he said.

Pumphrey says the move by the oil firms may be the latest phase of negotiations, aimed at putting pressure back on the Venezuelan government. It is unclear, however, whether Venezuela will agree to further talks, which officials said were to conclude Tuesday.

Venezuela has said if it could not reach a partnership deal with the oil companies, it will buy them outright and pay compensation. But experts say the government's compensation would likely be far lower than what the companies would want.

Pumphrey says President Chavez has been able to pursue his nationalization drive mainly because his administration has the money to support it.

"Higher oil prices have really provided Chavez with the kind of cash to make choices in the past he couldn't. A lot of those choices now have gone into extensive social programs," he said.

He says Venezuela's government must take care not to spend too much money to take over private industries, or else it will threaten cutting off funds to social programs, which are a key source of political support for President Chavez.