Venezuela's PDVSA proposes oil industry reform to boost private partners' role

It also proposed that PDVSA cuts stakes in several fields, and allows private companies to operate refineries.


Venezuela's state-owned oil company Petroleos de Venezuela PDVSA.UL has proposed a sweeping industry restructuring to boost the role of private companies, according to a document seen by Reuters, in a reversal of decades of socialist policies.

In a presentation dated March 2020, the company's planning division recommended a committee appointed by President Nicolas Maduro to restructure the industry so that the company can allow private partners in oilfield joint ventures to operate fields themselves.

It also proposed that PDVSA cuts stakes in several fields, and allows private companies to operate refineries.

The proposal comes as national crude output has fallen 20% this year to 700,000 barrels per day (bpd), due to years of underinvestment and mismanagement, and amid U.S. sanctions aimed at ousting Maduro.

"Venezuela's oil production is no longer strategically important for the world, given the existence of new producers and the decline of national production," the document reads. "To boost production and make Venezuela a protagonist in the oil world again, the urgent restructuring of PDVSA is necessary."

While the proposal includes reforms that private companies have long suggested, it was unclear whether PDVSA's leadership would embrace it or how it would get implemented, since parts of the plan require approval from the opposition-held National Assembly.

Neither PDVSA nor the oil ministry immediately responded to requests for comment.

Maduro on Monday ousted Manuel Quevedo, a national guard general, from the dual role of PDVSA president and oil minister, and named Tareck El-Aissami, the economy vice president, as oil minister, and Asdrubal Chavez, a former PDVSA executive and cousin of late President Hugo Chavez, as PDVSA chief.

The proposal rolls back many changes Chavez, Maduro's predecessor and mentor, implemented during his 14-year tenure that boosted the state's role. It proposes changing the oil law to let private companies own majority stakes in joint ventures with PDVSA, and allowing private companies to export crude.

It proposes reducing PDVSA's stake in several projects to 50.1%, from 60% currently. For fields operated solely by PDVSA, it proposes converting them into joint ventures by selling stakes, or signing joint service agreements in which PDVSA pays a private company a fee to operate the field.

However, it recommends that PDVSA keeps its 60-70% stakes in Venezuela's five most productive joint ventures, including partnerships with Chevron Corp and China's CNPC.

It would also allow private companies to operate refineries. Venezuela's 1.3 million bpd refining network is mostly idle, resulting in fuel shortages. It proposes gradually lowering gasoline subsidies.

(Reporting by Luc Cohen; Editing by Bernadette Baum) ((; +58 424 133 7696; Reuters Messaging: Twitter: @cohenluc))

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