Venezuela launches oil sector overhaul
Venezuela’s legislature advanced a bill on Thursday to loosen state control over the country’s vast oil sector in the first major overhaul since the late socialist leader Hugo Chávez nationalized parts of the industry in 2007.
The legislation would formally break decades of state command over some of the world’s largest oil reserves, create new opportunities for private companies to invest and establish international arbitration for investment disputes.
Following the US capture of former President Nicolás Maduro earlier this month, the Trump administration has ramped up pressure on acting President Delcy Rodríguez and other allies of the ousted leader to invite greater investment from US energy companies in Venezuela’s flagging oil industry.
Stark retreat
A draft of the proposed legislation, a copy of which was seen by The Associated Press (AP), represents a stark retreat from the resource nationalism at the heart of Venezuela’s socialist-inspired revolution.
Reflecting US demands, the proposed legislation would allow private companies to independently operate oil fields, market their own crude output, and collect the cash revenues through contracts with Petróleos de Venezuela, the state-run oil company and long the cornerstone of Venezuela’s economy.
Crucially, the bill offers companies the option of settling legal disputes through arbitration in international courts rather than just local courts. It also allows the government to cut royalties from the current 30 percent to as low as 15 percent and slash extraction taxes to persuade companies to commit to difficult projects in underdeveloped fields.
The president of Venezuela’s National Assembly, Jorge Rodríguez, told lawmakers at the start of Thursday’s debate that the bill aims to “allow an accelerated increase in production” of oil in Venezuela.
“Oil under the ground is useless,” he said, referring to the need to boost oil production and open up exploration opportunities.
Initial approval
Pushed by Rodríguez, the bill is expected to advance swiftly through the ruling party-dominated legislature.
After around two hours of discussion, lawmakers gave initial approval to the bill on Thursday and sent it to a second round of debate, yet to be scheduled.
During the session, Orlando Camacho, a lawmaker and head of Venezuela’s national Fedeindustria business association, said the bill ensures “that oil continues to be the driving force of our country’s development.”
The proposed legal guarantees—ensuring that foreign companies can bring claims against Venezuela before international bodies—are necessary to attract private investment, he said, adding, “It is a bold step.”
