Assembly Approves E&P JV Contract Model

Lawyers for Venezuela's state oil firm PDVSA are drafting the final contract for each of the 32 new E&P joint ventures between the company and foreign and domestic oil producers after the national assembly approved the contract model on Thursday, PDVSA officials and lawmakers told BNamericas.

"The contract model will be sent to the energy and oil minister immediately," said Rodrigo Cabeza, a lawmaker from oil-rich Zulia state. The text of the model will be published in Friday's edition of the Gaceta Oficial, the government's newspaper of record.

The formal signing for each contract will be take place on Friday night at a gala in the Miraflores presidential palace in Caracas with President Hugo Chavez, said the official, who declined to be identified.

The contracts will last for 20 years and establish royalties of 33.33%. The tax rate is still being discussed by the assembly, although it is likely to be 50% as opposed to the current 30%. PDVSA will have a stake of 60-70% in each venture, Cabeza said.

"The 3.33% part of the 33.33% royalty will be handled directly by the municipalities," he added.

The fields to be included in the PDVSA-led JVs currently produce about 500,000 barrels a day of medium to light crude. Last year Venezuela unilaterally decided to rescind 32 operating agreements and turn them into E&P JVs, arguing the agreements were costing PDVSA too much money.

The foreign oil companies participating in the JVs are Royal Dutch Shell, Chevron, Eni, Total, Teikoku, Repsol, West Falcon Samson, Perenco, Petrobras, Vinccler, China National and Harvest Natural Resources. Three Venezuelan companies - Open, Inemaka and Suelopetrol - also agreed to migrate.

Venezuela is the world's fifth largest oil exporter and produces some 3 million barrels of crude a day.

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