Caracas is preparing the return of oil contracts with private companies that were last used in the 1990s before the Chavez era that made PDVSA the one and only operator of oil fields.

Venezuela is teetering on the brink of total collapse. Oil is Venezuela’s biggest asset. It makes sense it would try to use it better. The solution seems to be the choice of field operators.

A draft contract stipulates that the state oil company will give control over several fields to a set of local companies for a period of six years.

The companies will have to commit to boosting production, funding field maintenance, and purchasing whatever equipment they need to do all this. In exchange, PDVSA will pay them a fee for the oil they extract.

Sources close to the developments told Reuters the draft document was the foundation of a production-boost plan announced by President Nicolas Maduro at the end of August.

 

The plan, would involve investments of US$430 million to increase oil production by 641,000 bpd. The company picked 14 companies to take part, but the names of only seven have been made public.

Five of them are Venezuelan, one is based in Panama, and one is Chinese. According to the draft contract, in addition to the fees they receive for the oil they produce, the companies will also be reimbursed for the investments they make in the fields.

Oil Price.com / ABC Flash Point Oil News 2018.

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