Venezuela Minister Favors Modifying Existing Law to Create New E&P JVs

Venezuela's energy and oil minister and state oil firm PDVSA president Rafael Ramirez says the best way to form new E&P joint ventures would be via a reform of the existing hydrocarbons law, Caracas daily El Universal reported.

"Some specific reforms must be made" to articles in the law to allow the new JVs , Ramirez said from Vienna, where he is attending the 140th OPEC meeting this week.

The reforms include an article which states the commercialization of all hydrocarbons must be controlled by a state-owned company.

Venezuela's government is studying various options for creating about 20 new joint ventures with private oil companies that will be controlled by PDVSA.

Ramirez does not endorse the motion of having the national assembly approve an entirely new law designed exclusively to regulate the JVs put forward by lawmakers this week.

Creating a new law would, from a bureaucratic standpoint, take much more time than a reform of certain articles in the existing law.

Ramirez has in the past expressed his wish to modify the law to include higher taxes for oil projects as well. All the lawmakers in the national assembly belong to parties that support the current administration of Hugo Chavez, which would make any legal reform easier.

Ramirez also said that the four Orinoco projects - Ameriven, Cerro Negro, Petrozuata and Sincor - would be allowed to pay the 16.7% royalty with their production instead of cash.

These four projects upgrade extra heavy crude into about 500,000 barrels a day of synthetic crude.

This is the second time Venezuela's history the government has asked private oil companies to pay royalties in kind: the first time was in the mid-1940s during the brief revolutionary government of novelist Romulo Gallegos.

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