Venezuela’s oil ministry has suspended 19 oil production-sharing contracts with private companies signed under the administration of President Nicolas Maduro, four sources with knowledge of the move told Reuters on Thursday.
The suspension has had no impact on the country’s oil and gas output so far, the sources said. State oil giant PDVSA is selling the crude produced under the contracts while they are suspended, they added.
Caracas and Washington would review the contracts and may recommend revoking some of them, the sources said. The Venezuelan and U.S. governments are reviewing the credentials of the companies that signed them, the sources added. Some of the companies are little-known and the deals were signed while Venezuela was under U.S. sanctions.
The contracts under review include projects that recently began producing oil in challenging areas such as Lake Maracaibo, big ventures that aim to expand output in the Orinoco Belt, Venezuela’s main oil region, and small mature oilfields.
Maduro’s administration had little success securing investment through the production-sharing contract model as large oil players rejected a return to Venezuela after expropriations or avoided doing business with it due to U.S. sanctions.
The players that took on production-sharing contracts included Chinese, U.S., South American and Venezuelan firms, as well as some companies registered in tax haven countries, and some obtained contracts in multiple areas, according to a list seen by Reuters.
Some of the companies also outsourced the oilfields to contractors, two of the sources said.
The United States captured Maduro in January and took control of Venezuela’s oil exports and sales. Since then, the U.S. Treasury Department has issued general licenses that allow companies to trade Venezuela’s oil and to operate in the country’s oil and gas sectors, but require specific clearance by the Treasury’s Office of Foreign Assets Control.
Venezuela’s National Assembly passed a reform to the country’s hydrocarbon law in late January to facilitate foreign investment in the dilapidated oil industry. Under the reformed law, the government has six months to review existing contracts.
Venezuela’s ministries of oil and communications and the White House did not immediately reply to a request for comment.
The ministry and PDVSA are separately in talks with many of Venezuela’s traditional joint-venture partners, including Chevron, Repsol and Maurel & Prom, to allow them to expand the oilfields already assigned to their projects, which could contribute to increased crude and gas output.
(Reporting by Marianna Parraga in Houston, Erin Banco in New York and Reuters staff; Editing by Simon Webb, Nia Williams and Edmund Klamann)