A walkout that began last week by workers at drilling rigs operated by several foreign companies is illegal and unjustified, an official at Venezuela state oil firm Petroleos de Venezuela, or PDVSA, said Tuesday.

Jorge Esteves, head of labor relations in PDVSA's eastern division, said the work stoppage in eastern Monagas state began April 6 and is causing financial losses for PDVSA and the nation.

He said the contract workers are upset over an issue related to their pay, but said no formal complaint was filed by the workers that could legitimize their decision to stop working.

The rig workers provide services for China National Petroleum Corp. and oil-field services companies Schlumberger Ltd. (SLB), Precision Drilling Trust (PDS, PD.UN) and Petrex, which is part of Italy's ENI SpA (E, EN.MI)), a statement from state-run ABN news agency said. However, an official at Precision Drilling, headquartered in Calgary, Canada, said the company doesn't own or operate any rigs in Venezuela. It wasn't possible to immediately reconcile the conflicting information.

So far, the work stoppage hasn't affected production as the drilling rigs are at new wells. "But down the line this could affect output," Esteves said.

Venezuela is South America's top oil producer.

The country faced several crippling strikes by oil workers in years past. But the government of President Hugo Chavez recently has aligned most oil workers' unions with his socialist government, which has sharply reduced concerns about workers' strikes and any potential impact on production.

-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; dan.molinski@dowjones.com
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