(Argus, 30.Jul.2019) — Venezuela´s fledgling opposition government is putting the final touches on a strategic package of economic measures designed to allow time for a future administration to adopt sweeping structural reforms.
The emergency measures, contained in an omnibus legislative bill now before the exile government´s special attorney general and Harvard visiting fellow Jose Ignacio Hernandez, would be implemented on the day after President Nicolas Maduro departs, senior opposition advisers to putative interim president Juan Guaido tell Argus.
Maduro and his inner circle have so far refused to relinquish power. But the opposition wants to be fully prepared for his departure and a political transition, however it comes. In ongoing Norwegian-sponsored talks in Barbados, the two sides are discussing a possible deal for early elections next April.
As the opposition´s main short-term planning vehicle, the omnibus bill would authorize steps to restore monetary stability through a revamped central bank and revive oil production by leveraging state-owned PdV´s existing joint ventures with foreign oil companies and facilitating the swift return of oil services companies.
Among the key provisions is authorization for incumbent oil companies, including Chevron and Spain´s Repsol, to market oil production.
The measures would be implemented in parallel to a “takeover” of PdV itself by a vanguard team of around 1,200 managers and security personnel, most of whom would be dispatched to the company´s upstream and downstream operating areas, with around 100 earmarked for the company´s Caracas headquarters. Under the finely detailed plan that starts with opening the doors, the team´s objectives would be to reassure existing staff and protect installations and information. About 80pc of the company´s current employees are anxiously awaiting this “rescue”, one of the advisers said.
PdV´s existing management, led by chief executive and oil minister Manuel Quevedo, would be replaced by a temporary intervention board appointed by Venezuela´s new administration until permanent authorities are selected.
A senior PdV official in Caracas expressed caution. While most employees would embrace new professional management, some individual opposition figures might not be welcome, the official told Argus.
According to the opposition´s ambitious roadmap, the omnibus economic measures and assertion of control over PdV would be coupled with a lifting of US sanctions and the quick entry of essential goods to avert social upheaval in the immediate aftermath of Maduro´s departure.
Among the exile-led administration´s concerns is how to secure and pay for urgent supplies of food and fuel to replenish Venezuela´s near-empty stocks and quell potential unrest. Privately, they say that a shortage of funds is the main planning constraint.
Regulatory muscle
Once a transition government is established, the National Assembly would take up proposals for new hydrocarbons legislation and other structural reforms.
The latest version of the hydrocarbons bill obtained by Argus would establish a strong regulatory body, the Venezuelan Hydrocarbons Agency (AVH), along the lines of Brazil´s ANP, and open up the industry in a manner similar to Mexico´s 2014 energy reform. PdV, like Mexico´s Pemex, would retain some acreage with the rest to be offered in regular tenders in which the Venezuelan company would compete with other oil companies.
According to one of the Venezuelan authors of the draft legislation, the proposed upstream contract terms are sufficiently flexible and the fiscal terms progressive for PdV and the private sector alike, transforming the country into a “compelling opportunity” for investment.
The range of opportunities will run from extra-heavy oil to mature areas close to existing infrastructure, with appeal for integrated majors to junior independents.
Critics say the draft bill gives too much power to the AVH and may not provide sufficient fiscal leeway to make Venezuela competitive with other oil-producing countries.
Among the broader subjects of discussion is whether Venezuela should remain in Opec, a group that Caracas helped to establish in the 1960s. In the view of one adviser, the imperative of rebuilding Venezuela through oil sales is not compatible with Opec´s production caps, but a withdrawal would be difficult to sell to Venezuelan politicians.
The hydrocarbons bill is currently in the hands of the opposition-controlled assembly´s energy commission.
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