Venezuela may be ready to open its oil sector to private investment, as the south American country tries to tackle with the collapse in crude output and the financial harm from U.S. sanctions.
According to sources that remain anonymous, quoted by Reuters, president Nicolas Maduro and oil officials have held meetings aimed at open Venezuela’s oil sector to private investment; privates would operate state-owned oilfields, in return for a part of the earnings.
The opening of the sector would offer even sweeter terms than the previously offered in the 2018 plan, that changed for the first time the protectionist approach of the country to this resource.
This opening of the oil sector to privates is something also seen in Mexico; when former president Enrique Peña Nieto opened Mexican oil to private operations. Nevertheless, the successor to the Mexican presidency, Andres Manuel Lopez Obrador, has rolled back several of those instances to an again state-operated sector.
As we have reported previously, many of those rollbacks have been criticized by U.S. officials, as they would undermine the new USMCA agreement.
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Venezuela wants to increase oil output to 2018 levels
For Venezuela, it is still unclear which companies have actually signed contracts, or may interested in investing; any attempts on working with Venezuela may carry Washington sanctions, or uncertainty in payments or in the stability of the contracts.
According to Reuters, the companies that are showing interest, are Venezuelan and relatively small. Those are S&B Terra Marine services, Maracaibo-based; and Monagas-based Arco Services.
Just recently, and after a heated electoral process, the socialist party gained control over the National Assembly; allowing Maduro to reform the law, and establish an “anti-blockade” bill, which allow his government to sign oil contracts confidentially. Such law also provides further opportunities to privates to invest in Venezuelan oil sector.
According to Nicolas Maduro, Venezuela’s goal is to increase its production to 1,5 million barrels a day, “with new mechanisms of production, financing and commercialization.” Such amounts will restore production from the OPEC member country to 2018 levels.