A major proposed change to Venezuela’s hydrocarbons law would allow both international and local companies to independently run oilfields under a new contract system. These companies could market their oil and keep the sales revenue, even if they are only minority partners alongside the state-owned PDVSA, according to drafts reviewed by Reuters.
Last week, interim President Delcy Rodriguez submitted this reform proposal—which is expected to significantly reshape the core of Venezuela’s oil industry by amending the landmark legislation from former President Hugo Chavez—to the National Assembly. Lawmakers will begin discussing it on Thursday, shortly after Caracas and Washington reached a pivotal 50-million-barrel oil supply agreement, following the U.S.’s capture of President Nicolas Maduro.
Oil executives and prospective investors—key players in Washington’s $100 billion plan to rebuild Venezuela’s energy sector—are seeking greater independence to produce, export, and retain proceeds from oil sales within the country, especially after nationalizations and expropriations under Chavez two decades ago.
The reforms would also allow the government to lower royalties to as little as 15% (down from the current 33%) for special projects or those needing significant investment. In addition, the proposal introduces independent arbitration as a way to resolve disputes.