Venezuela and foreign oil partners have advanced negotiations to shift dozens of existing joint ventures onto the new terms required by a recent hydrocarbon reform, but the paperwork needed to finalize those migrations has not been completed, four people involved in the preparations told Reuters.
The oil ministry had established July 28 as the target date to finish migrating every active project to the new framework. A range of linked permits and ancillary agreements tied to core contracts has frustrated efforts to meet that timetable.
Among the migration requirements is a weighted royalty rate that applies to projects combining output from established, mature fields with production from newly accessed, previously untapped fields. In addition, taxation rules that change depending on the category of project have introduced further layers of complexity for negotiators.
Executives from participating companies have been traveling to Venezuela to take part in face-to-face discussions as flights permit, after twin earthquakes last month disrupted travel. Those meetings cover amended terms for companies already in existing joint ventures as well as fresh contracts for firms seeking to enter or to return to the country.
Venezuelan officials have not publicly announced an extended deadline for completing the migration process. According to the people involved in the preparations, the government has told companies there is flexibility to execute complementary agreements after the principal contracts are signed.
Earlier in the month, business groups representing foreign companies and contractors formally asked the government for a deadline extension. The oil ministry did not accept that request, saying most joint ventures have made progress on negotiating their core contracts.
The hydrocarbon reform law, approved in late January, set a 180-day period for projects to migrate to the new contractual model. That statutory timetable is the baseline against which the ministry and companies have been coordinating their negotiating and signing efforts.
Context and current state
- The migration effort is active but unfinished because ancillary permits and agreements remain outstanding.
- Negotiations continue in person when travel conditions allow following last month's earthquakes.
- The government signals procedural flexibility but has not issued a formal deadline extension.