Venezuela suspends 19 oil, gas production-sharing contracts signed under Maduro, sources say

Four sources familiar with the matter said that Venezuela's oil ministry suspended 19 contracts signed with private companies under the?administration? of President Nicolas Maduro.

Sources say that the suspension of the contracts has not affected the oil and gas production in the country. The sources added that the state oil giant PDVSA sells the crude produced by the contracts even though they are suspended.

Sources said that Washington and Caracas would review contracts and could recommend "revocating" some of them. Sources say that the Venezuelan and U.S. governments are reviewing credentials of companies who signed the contracts. The sources added that some of the companies were little-known, and the deals had been signed when Venezuela was under U.S. sanction.

The contracts under review include large ventures that are aiming to increase output in the Orinoco Belt (Venezuela's main oil region) and mature small oilfields.

Maduro’s administration has had limited success in securing investment through the production-sharing model. Large oil players have either refused to return to Venezuela following expropriations, or avoided doing business due to U.S. sanction.

According to a list provided by, some of the companies that signed up for production-sharing agreements were Chinese, U.S. and South American firms as well as Venezuelan and Venezuelan companies. Some also registered in tax havens, and others obtained contracts across multiple sectors.

Two sources confirmed that some companies outsourced oilfields to contractors.

In January, the United States captured Maduro and took over Venezuela's oil sales and exports. The U.S. Treasury Department issued general licenses to allow companies to trade Venezuelan oil, and operate in Venezuela's oil-and-gas sector. However, these require clearance from the Treasury's Office of Foreign Assets Control.

The Venezuelan National Assembly adopted a new hydrocarbon law at the end of January in order to "facilitate" foreign investment in Venezuela's ailing oil industry. The government will have six months to review contracts under the new law.

The Venezuelan ministries of oil, communications and the White House have not responded to requests for comment.

Both the?ministry? and PDVSA?are separately in a?talk with many of Venezuela’s traditional joint-venture?partners,?including Chevron?, Repsol?, and Maurel & Prom?, to allow these companies to expand their oilfields assigned to projects. This could lead to an increase in crude and gas production. Reporting by Marianna Paraga in Houston and Erin Banco and staff in New York; Editing by Simon Webb and Nia Williams.

(source: Reuters)