The domestic economy of Venezuelans continues to float in the sea of instability even though the dollar price in the market has stabilized at a significant distance from the official price. Chicken, eggs and other products in supermarkets are much more expensive. Only meat can be bought cheaper as an exception to the rule of uncertainty. The only sign of minimal clarity, although forceful, has just been offered by the National Assembly (AN). The hydrocarbons bill has just passed its first test in the legislature and, for an eminently oil-producing country, it is a completely adequate to the reality that emerged from the North American military operation of January 3 which led to the capture and transfer to the United States of Nicolas Maduro. The ruling party denies that the text blessed by the “president in charge”, Delcy Rodríguez, was written to satisfy Donald Trump’s desires to manage the Venezuelan crude oil business. However, it incorporates several elements that suggest a more than suggestive turn in the industry. “It could change the rules of the game in the Venezuelan oil sector by granting greater powers to national or foreign companiesas well as the minority partners of Petroleos de Venezuela (PDVSA)for operations in the country, including direct marketing of production,” says the portal The Pitazo.
The current hydrocarbon law reserves oil activities to public or mixed companieswhere the State has a majority participation. A new article will, however, allow the minority shareholder directly market the entire production of that company, in addition to exercising its technical and operational management. State companies or their subsidiaries may from now on lease assets and materials or assign the use of the operating areal, as well as signing contracts with private firms for the execution of primary activities “at their exclusive cost, account and risk.”
New benefits
The article on the benefits for the State derived from the extraction of hydrocarbons incorporates a new element by reducing them to 15%, half of the existing figure. And, something that analysts have not overlooked, Alternative dispute resolution mechanisms will be admitted. and debt issues, including mediation and independent arbitrations.
He discursive turn of the ruling party is eloquent. The deputy and president of Fedeindustria, Orlando Camacho highlighted that the reform adopts “successful business models“already proven in the agreement with Chevron, increases the legal guarantees for investment in the hydrocarbon sector, and contemplates Productive Participation Contracts (PPC) “in which the operating company assumes comprehensive management at its own risk.” The changes are imposed not by the actions of January 3, but are required the need for a new “balance” y “large investments are needed”. The same thing that Trump had stated when inviting multinationals to join what he presents as his own project.
The reduction in the money that the State will receive will allow “attract” foreign capital. According to Camacho, this is an adaptation to the international energy scenario based on “agile regulatory frameworks.” And in order not to break with the legacy of Hugo Chavezsaid that although the 2002 nationalizations were successful, the legal instrument presented by the Government is adapted to “new times” and “productive peace.”
A new reality
Jorge Rodríguez, the main parliamentary authority, He stressed the importance of adapting the legal framework to the “current economic realities” and allowing Venezuela to maintain its growth rate of recent quarters thanks to the role played by Chevron, while it had the endorsement of Trump’s predecessor, Joe Biden. The older brother of the “president in charge” urged the opposition groups to commit to the pending discussions for approval. Pablo Pérez, one of the opponents who occupies a seat in the AN, stressed that, after the Magna Carta, the hydrocarbon law is a fundamental law for the country whose exports are almost 95% oil. “The entry of private capital does not represent a loss of sovereignty; “Excessive nationalization did not bring us positive results.”.
First entry of money
The session at the AN took place a few hours after Maduro’s provisional successor reported on the income of 300 million dollars within the framework of the crude oil sale agreement with Washington for 500 million of the North American currency. That money, said the “president in charge”, will be used to cover and finance the income of workers, battered by inflation. The Government, he said, “is there to guarantee the happiness of our people, and we to take care of our territorial integrity, our sovereignty, our freedom and our independence.” According to White House spokeswoman Karoline Leavittthe new Venezuelan authorities have fulfilled “all the demands and requests” of Washington. The US decided to “manage” those revenues before transferring them to Caracas. Energy Secretary Chris Wright said in turn that the White House will control the sale of Venezuelan crude oil for an “indefinite” period. The reform of the hydrocarbon law does not seem to be unrelated to this situation.
Subscribe to continue reading
