Juan Guaidó calls for the reopening of the Venezuelan oil industry to private investment

Venezuela would allow foreign oil explorers to drill without badociating with the state oil company if the current regime was replaced, said one of the interim president's key advisers Juan Guaidó.

The change represents a major break with the dictator's policy, Nicolás Maduroand his late predecessor Hugo Chavez.

"We must open the oil industry to private investment without the participation of the state"he said Ricardo Hausmann at a round table Tuesday at the conference CERAWeek of IHS Markit in Houston.

The state oil company Petróleos de Venezuela SA is an "obstacle" to recovery in the oil sectorhe said.

In this sense, National Assembly of Venezuela, led by Guaidó, is preparing to discuss new legislation aimed at reversing the nationalization of the oil industry implemented by Hugo Chávez, allowing private companies to play a key role in the country and reducing the size of PDVSA, according to sources and a draft seen by Reuters.

The proposal would be essential to stem the collapse of the oil industry of the OPEC member countryresponsible for 90 percent of its export earnings, aims to get support for Guaidó from foreign companies that could finance a reconstruction, oil production has fallen to a minimum in seven decades.

According to the proposal, which will be launched in the coming days,Private companies may choose to handle routine operations in Venezuelan oil fields, a radical change since the Chavez era, which limited foreign companies to belong to a minority without operational control.

PDVSA would remain a major player in the oil industrybut a portion of its badets would be transferred and auctioned by a new independent regulator, similar to the one that carried out Mexico's deep energy reform, ending a 75-year monopoly.

The Guaidó team has won support in the country and abroad, but he was not able to take the socialist dictator control of the government, the army and PDVSA, the core of the country's economy.

"The Venezuelan oil industry collapsed after years of arbitrary policies that turned PDVSA and its affiliates into mere political instruments in the service of the socialist model"says the preamble of the law.

The Guaidó team offers a wide variety of exploration and production contracts this would allow private companies to individually farm fields in Venezuela for the first time in decades. According to the draft proposal, they could also apply to operate refineries and facilities in the country's fuel sales chain.

The new contracts would be awarded by the new regulator, who would organize a "round table" and allow PDVSA to choose the areas that he wants to keep in his portfolio.

"All hydrocarbon deposits may be subject to important tender procedures and decided by the Venezuelan Hydrocarbons Agency", adds the preamble.

PDVSA did not respond immediately to a request for comment.

The flow Venezuelan Organic Law on Hydrocarbons, the backbone of an economy dependent on oil revenues, was approved by Chavez in 2001 under special powers to legislate, and then reformed to increase the tax burden and control of the sector over the government.

Chávez led a long wave of nationalizations in which the ConocoPhillips and Exxon Mobil Corp projects were expropriated. These two companies and others have earned billions of dollars in international arbitration claims.

The new law would impose a flexible royalty rate of a minimum of 16.67% and a maximum of 30%, depending on the price of oil, which would eliminate fictitious taxes that increase the tax burden. Currently, companies such as Chevron Corp are remunerated through dividends paid by PDVSA.

According to the legislation, PDVSA would remain a state-owned company, but it would no longer be obliged to participate in all oil operations in the country.

With information from Bloomberg and Reuters