In Venezuela, a law was passed on Thursday night to open the oil sector to privatization. Parliament first approved the bill on Thursday evening, after which acting President Delcy Rodríguez signed the law a little later.
“We unanimously approved a reform of the oil and gas law that would make it more attractive to use domestic and foreign companies to extract raw materials from the world’s largest oil reserves,” said parliament speaker Jorge Rodríguez, the brother of the interim president.
The drastic change in the law gives private companies, including foreign oil companies, more autonomy in the extraction and sale of oil and gas. This removes an important barrier for investors, because state oil company PDVSA will lose its mandatory majority stake and exclusive control over projects and income.
Nationalization
The law represents a clear break with the policy initiated at the beginning of this century under President Hugo Chávez, when the sector was nationalized and state control was tightened. Since then, despite the country’s largest proven oil reserves in the world, Venezuela’s oil industry has suffered from mismanagement, underinvestment and international sanctions.
The reform follows the kidnapping of President Nicolás Maduro by US forces early this month, after which his former Vice President Rodríguez was installed as interim president.
American President Donald Trump justified his action with references to drug smuggling from Venezuela to the United States, but also spoke about oil at a press conference. He said major U.S. oil companies should restore and exploit “the badly damaged oil infrastructure.”
US relaxes sanctions
Shortly after the passage of the oil law, the United States relaxed its sanctions on the Venezuelan oil sector. For example, refining by American companies will be allowed again. Washington wants US oil companies to invest on a large scale in Venezuela.
In recent years, the American energy company Chevron remained active in the Venezuelan oil sector on the basis of a special permit. This allowed the group to continue existing joint ventures with state oil company PDVSA, without making new investments or expanding production.
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