MARIANNA PÁRRAGA
EL UNIVERSAL

On the brink of the 21st century socialism, there is small room for a private stake in the domestic oil industry. This is true for the changes to the Constitution proposed by President Hugo Chávez. However, some loopholes may be a future chance.

As stated in the proposed amendment to article 302, out of all the activities included in the oil business, the State will reserve only the exploitation of hydrocarbons. Such reserve has been established both in the relevant organic law and expressly in the Constitution.

Some lawmakers may think that, in line with the rationale provided by the President and based on the shift in the domestic oil policy, replacing the definition of reserve of "the oil business" with "exploitation of hydrocarbons" was a technical mistake. However, according to Rafael Ramírez, Minister of Energy and Petroleum and CEO of state-run oil holding Petróleos de Venezuela (Pdvsa), exploration by private companies is not inconsistent with the energy policy implemented thus far under the government of President Chávez.

He explained that, once marketability of an area at the end of the exploration stage is declared, the private party should enter into a partnership with Pdvsa. Then, the state company will take care of the operations, make the administrative decisions and keep the majority equity ownership in each of the joint ventures through the Venezuelan Petroleum Corporation (CVP).

Even farther
In terms of downstream -refining, distribution and marketing of liquid hydrocarbons and processing, delivery and distribution of gas hydrocarbons- private parties will have also the green light to operate individually. Therefore, the spirit of the hydrocarbons organic law, drafted and approved in 2001, will prevail.

"In the event of individual exploration by private parties, once marketability is declared, they should enter into a joint venture, with Pdvsa having the majority shareholding. The model used for projects, such as Rafael Urdaneta -in Gulf of Venezuela- and Delta Platform is to prevail. The State will accompany them in the production stage, said Ramírez.

However, he noted that exploration, either individually or by means of joint ventures with private parties, is a must, "even outside the country."

Translated by Conchita Delgado
cdelgado@elunversal.com

SEE THE SPECIAL FEATURE ON THE CHANGES TO THE CONSTITUTION