Venezuela is considering privatization in the oil sector
Facing economic collapse and severe sanctions, Venezuela’s socialist government proposes to provide a majority stake and control over its oil industry to large international corporations. The privatization of the sector will mark the end of decades of state control.
The government of President Nicolas Maduro has already held talks with Russia’s Rosneft, Spain’s Repsol and Italy’s Eni. The idea is to allow them to take over state-controlled oil assets and restructure some of the debt of the state-owned Petroleos de Venezuela SA (PDVSA).
The proposal, which could prove crucial for the sector in the country, is still at an early stage and will have to deal with significant obstacles. Venezuela’s legislation must be amended to make privatization a reality. There are also controversies in Caracas over how to fund operations because US companies are not allowed to do business with the Maduro regime because of Washington sanctions. They also limit investments by non-US companies in Venezuela.