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(Reuters) – Lawmakers are expected to discuss on Thursday a sweetened reform of Venezuela’s main oil after a proposal submitted by interim President Delcy Rodriguez was modified to introduce a new hydrocarbon tax, the possibility of asset privatizations and oilfield operation outsourcing, a draft seen by Reuters showed.
The changes are expected to encourage oil and gas production increases and foreign investment following a $100 billion reconstruction plan for the industry proposed by U.S. President Donald Trump this month after the U.S. capture of President Nicolas Maduro.
The fast-tracked discussion of the backbone of the country’s oil industry comes after 20 years of strict nationalization and the expropriation of assets previously owned by foreign companies including U.S. majors Exxon Mobil and ConocoPhillips, which have not been fully compensated after years of arbitrations and lawsuits.
The proposed reform also intends to formalize an oil production sharing model first introduced by Maduro and negotiated with little known energy firms in recent years.
Changes to the text added in recent days aim to reduce income tax for energy projects while introducing a new ‘hydrocarbon tax,’ which would be regulated in separate legislation.
Extra taxes are set to be removed.
The legislature’s energy committee received 104 proposals to modify the law, lawmaker Orlando Camacho, who is allied with the government, told journalists after a meeting ahead of the session on Thursday.
The possibility of privatizing oil assets currently owned and operated by state oil firm PDVSA, and to outsource the operation of oilfields under the new contract model were also added recently to the reform.
Those production sharing contracts are expected to be signed over the next six months as the government negotiates with the companies that have for years been minority partners of PDVSA-controlled joint ventures, and which are now seeking autonomy to operate and commercialize their projects’ output.
The National Assembly is expected to lose approval authority over contracts, with the oil ministry – currently also controlled by Rodriguez – taking over almost all power to sign contracts and greenlight any term changes.
Reporting by Reuters; Editing by Julia Symmes Cobb
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