July 2017 – @anteroccr – Venezuela and its debt-laden national oil company PDVSA have quietly begun taking steps toward a more liberalized local oil industry, an expert told BNamericas.
Despite the populist rhetoric of embattled socialist President Nicolas Maduro and calls for a fully nationalized oil sector from pro-government hardliners under a planned rewriting of the constitution, further appropriation of the industry in the foreseeable future is “impossible,” Antero Alvarado, managing partner in Venezuela for Gas Energy Latin America, said in an interview, citing that PDVSA recently sent a letter to worried investors confirming as much.
In reality, the local industry is moving in the opposite direction, Alvarado said, toward more operational leeway and control over cash flow for PDVSA’s joint-venture partners, which include majors such as Chevron, Repsol, Statoil, Royal Dutch Shell and Rosneft.
Oilfield services companies — to whom PDVSA owes over US$24bn — are increasingly negotiating directly with these partners, Alvarado said.
Oilfields operated by the JVs, or empresas mixtes, are the only ones where production is increasing, he said, as output from 100% PDVSA-operated fields plummets.
Services firms like Halliburton and Schlumberger “have reduced their operations and are only working with joint ventures that have positive cash flow, leaving the others practically to their natural death,” Alvarado said, adding that JV partners already active in the Orinoco extra-heavy oil belt will be the first to reap the benefits of an impending liberalization cycle in the country.
“By law, PDVSA only needs a 50.1% stake in a JV,” a recent BNamericas Intelligence Series report highlights. “Today, it essentially has a 60% share or greater in all of its partnerships – so there is a degree of wiggle room.”
PDVSA’s willingness to loosen its control over oil projects in the country speaks to its desperate situation, especially considering that the company’s top executives now mainly comprise Maduro loyalists.
The Maduro-friendly supreme court also granted authority this year for the executive branch to unilaterally approve the sale of stakes in JVs with PDVSA, an action that previously required legislative approval.
Venezuela’s oil-dependent economy is expected to contract for a fourth consecutive year in 2017. News outlets reported Friday that the death toll since the latest wave of anti-government protest began in April had surpassed 100.
RELATED: Venezuela’s PDVSA vows tight crude focus as crisis deepens.
Entrevista por BN America
