Oil companies sign agreements in Venezuela but delays persist

Four?sources? involved in the preparations say that Venezuelan officials and oil executives are moving ahead with the migration of dozens joint ventures into a new framework approved as part of a government reform. However, there is still a delay in finalizing agreements necessary to greenlight these projects.

Venezuela's Oil Ministry had set a deadline of July 28 for the completion of the migration process. However, the many permits and agreements that are linked to the core contracts have caused obstacles. The requirements include a new weighted royalties rate for projects that combine existing mature oilfields with untapped, new fields. Taxation is complex and varies depending on the project. Following the twin earthquakes of last month, executives have arrived in Venezuela to negotiate amended contracts or sign new pacts with companies that are interested in returning to the country or entering for the first time. According to anonymous sources, Venezuelan authorities have not announced a formal extension of the deadline to complete migration. However, they are encouraging companies to sign additional agreements following the main contracts. This month, business organizations that represent foreign companies and contractors asked for a formal extension to the deadline. The oil ministry refused to grant the extension, stating that?most joint ventures had made progress in core contract negotiations. The hydrocarbon reform act, which was passed late in January, gave 180 days for a project to be migrated. Eni and other companies have signed production-sharing contracts for new oilfields instead of joint ventures to cut down on paperwork or to work under more flexible conditions.

Some fear that their projects could be rescinded and offered to?new companies due to disagreements about pending debts and the fulfillment of previous investment plans. Caracas, Washington and other countries have urged firms to commit to new investments. There is no set deadline for signing contracts. After the U.S. military captured President Nicolas Maduro, and Washington's support for acting President Delcy Rodriguez's interim administration, the U.S. Government is pushing for a $100 billion plan to rebuild Venezuela's energy industry. (Reporting and editing by Paul Simao, DeisyBuitrago, MariannaParraga)

(source: Reuters)