CARACAS, Venezuela (AP) — Venezuela’s legislature opened debate Thursday on a bill 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 create new opportunities for private companies to invest in the oil industry and establish international arbitration for investment disputes.
Following the U.S. 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 U.S. energy companies in Venezuela’s flagging oil industry.
A draft of the proposed legislation, a copy of which was seen by The Associated Press, represents a sharp turn away from the resource nationalism of Chávez, who accused multinationals of colonial exploitation and considered the country's oil wealth to be state property.
In apparent response to demands from U.S. oil executives, the proposed legislation would allow private companies to independently operate oil fields, market their own crude output and collect the cash revenues despite remaining, on paper, minority partners to the state oil company.
“The operating company shall assume the comprehensive management of the execution of the activities, at its sole cost, expense and risk,” the draft says, adding that portions of production volumes “may be directly commercialized by the operating company, once governmental obligations have been fulfilled.”
Crucially, the bill also would let companies settle legal disputes through arbitration in international courts rather than only local courts.
The legislation also would keep the current 30% royalty rate, but let the government cut royalties and taxes to as low as 15% for expensive or hard-to-develop oil projects, so that companies would be more willing to invest.
The president of Venezuela’s National Assembly and the acting president's brother, 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 new exploration opportunities.
Pushed by Delcy Rodríguez, the bill is expected to advance swiftly through the ruling party-dominated legislature. Lawmakers concluded the initial discussion of the bill on Thursday after around two hours and advanced the legislation 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, told the assembly that the bill would ensure that Venezuela’s oil industry “remains the engine of the country.”
The proposed legal guarantees — ensuring that foreign companies can bring claims against Venezuela before international bodies — are necessary to attract private investment, he said.
Even as U.S. President Donald Trump looks to lure American companies to reboot Venezuela's oil sector, many remain concerned about the financial and legal risks of pouring billions of dollars into the country.
Plenty of investors have been burned before, their assets seized as Chávez nationalized parts of Venezuela’s lucrative oil industry in 2007. Firms like Exxon have been trying to get the Venezuelan government to compensate them for their billions of dollars in losses ever since, to no avail.
The current political uncertainty also worries investors. There is no timeline for holding democratic elections in Venezuela after Maduro's ouster as Rodríguez, long Maduro's loyal second in command, seeks to consolidate control. The Trump administration also hasn't said when it will lift the crippling sanctions imposed to weaken Maduro's government, which further restrict foreign operations in the country's oil sector.
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Associated Press journalist Isabel DeBre contributed to this report from Buenos Aires.
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