Venezuela Circulates Draft of Oil Law Regulations for Companies

(Bloomberg) — The Venezuelan government is releasing a draft regulation as part of its newly enacted oil law, eagerly awaited by companies planning to invest in the country’s growing oil production.

The 63-page draft reviewed by Bloomberg sets out details of technical, operational, financial and control provisions for companies working in the country’s oil and gas fields. It sets standards for the activities of private companies in areas previously monopolized by Petróleos de Venezuela SA, such as oil refining, refining and trading. It also repeals the country’s 1943 oil law and 1969 regulations.

PDVSA has also begun distributing a contract offered to energy companies interested in operating in the Latin American country.

The regulations and contract models have been long awaited by the oil industry, with the new hydrocarbon law taking effect in January, shortly after the United States forcibly removed former president Nicolas Maduro and allowed No. 2 Delcy Rodriguez to assume the presidency. The framework details the extent of Venezuela’s openness to foreign investment and its relinquishment of decades of tight state control.

A proposed contract model for energy companies began circulating among companies in early May. Venezuela’s information and oil ministries did not respond to requests for comment.

Miami-based referee and energy expert Elisabeth Eljuri wrote in a LinkedIn post Friday that the regulations’ provisions cover “new issues” for the nation’s oil industry, “including local use, unitization, returning data to the state, greenhouse gas impacts, and monitoring.” “It seems to suggest that the implementation of enhanced recovery and secondary recovery is essential in every project.”

The United States is working with the Venezuelan government to integrate its economy into the international financial system after years of being isolated under U.S. sanctions. The US Treasury has begun lifting oil and financial sanctions as part of a three-phase program for Venezuela that includes stabilization, economic recovery and political transition.

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