Venezuela has given the world's biggest oil company, ExxonMobil, until the end of this year to enter a joint venture with the state.
Failure to do so will almost certainly result in Exxon losing its oil field concessions in the country.
Venezuela's socialist government has now signed new agreements with almost all foreign petroleum companies.
After months of pressure from left- wing leader Hugo Chavez most foreign oil firms working there have caved in.
They have agreed to hand over a controlling stake of their oil interests to the Venezuelan state.
This means that Venezuela, which has the world's largest petroleum reserves, now calls the shots in what the foreign guests can and cannot do.
In addition, the companies which have signed the new contracts - such as Chevron, BP, Shell and Total - will in future be presented with much higher tax bills by the government.
Foreign unease
But Venezuela says it is only fair that the foreigners are made to pay up as they have got away lightly in the past.
Much of the oil revenue in Venezuela goes into social projects in shanty towns and poor rural areas.
But the US oil giant, ExxonMobil, is digging in its heels and is so far refusing to agree to the terms of the new deal.
Exxon risks losing Venezuelan operations if it fails to comply.
There is growing unease among foreign energy companies based Latin America that they may be forced to become junior partners by a string of left wing governments.
In the case of Bolivia and the apparent shift to the left there following elections on Sunday, it is possible that the new government will decide to follow Venezuela's example and renegotiate oil and gas contracts with foreign investors.
