Facing economic collapse and painful sanctions, the socialist government of Venezuelan President Nicolas Maduro has proposed giving majority shares and control of its oil industry to big international corporations, a move that would forsake decades of state monopoly.
Maduro’s representatives have held talks with Russia’s Rosneft PJSC, Repsol SA of Spain and Italy’s Eni SpA. The idea is to allow them to take over government-controlled oil properties and restructure some debt of state oil company Petroleos de Venezuela SA in exchange for assets.
The proposal, which could offer a boost to the country’s disintegrating oil industry, is in early stages and faces major obstacles. Venezuelan laws would have to be changed, there is disagreement over how to finance the operations, and Washington’s sanctions bar any US companies from doing business with the Maduro regime without a waiver. The sanctions have also discouraged non-US firms from investing in Venezuela.
Once an admired state-dominated company producing 3.5 million barrels per day, PDVSA is pumping at a record-low of 700,000, despite sitting on the world’s largest known reserves. Its finances are in tatters: The central bank’s hard-currency reserves have plunged to the lowest in three decades while the government’s cash holdings total less than $1 billion.
For the US Treasury to change its policy would almost certainly require sign-off from opposition leader Juan Guaido, who is backed by Washington over Maduro and is the leader of the National Assembly, where laws are passed.