Venezuela Overthrows Chavez-era Oil Laws
JustinVenezuela's national assembly today unanimously passed changes to its oil laws that allow more private-sector ownership in its fields and provide more investor assurances, as US administration officials have demanded.
Venezuela's national assembly today unanimously passed changes to its oil laws that allow more private-sector ownership in its fields and provide more investor assurances, as US administration officials have demanded.
The changes included repealing a group of six regulations that were in addition to the last major hydrocarbon law package passed in 2006, under late former President Hugo Chavez. Those laws had regulated the nationalization of major oil projects in the Orinoco heavy crude belt and assets of oilfield service companies, seizures that led to long-running legal claims from companies including ExxonMobil and ConocoPhillips.
"Every aspect of the oil business will no longer be 100pc state-owned, like Chavez wanted," Dolores Dobarro, who was deputy oil minister when Chavez implemented the laws around 2006, told Argus. "I'm for it, I think it's fine."
The changes mean that in some oil projects the government's take, in taxes plus royalties, will not automatically be of 83.33pc, but will instead hover from 65-80pc and perhaps even less, once other modifications are factored in.
Royalties in oil projects will no longer be a set 33.33pc but will instead be calculated on a sliding scale depending on the project, from 15-30pc, according to the changes to the hydrocarbons law itself passed today.
The tax rate is also no longer set at 50pc, independent of the project. A new tax rate was not specifically set, but this could come in later regulations.
Companies investing in oil and natural gas will also be exempted from a series of national, local and state taxes. The total financial impact will need to be tallied, experts told Argus, but it is a significant change.
"A lot has been left to the discretion of the authorities with these modifications," another former oil minister told Argus. "But I think by and large oil companies such as Chevron will see this as a positive."
The law as proposed by interim vice president Delcy Rodriguez had passed in a first debate on 22 January with no changes. The new legislation comes after the US has claimed the direction of Venezuela's oil policy in the wake of its capture of former president Nicolas Maduro.
