Legal questions cloud reported US stake in Venezuela oil fields

Legal concerns have emerged regarding the reported possibility of the United States acquiring an ownership stake in Venezuela’s oil fields. Reports, citing unnamed U.S. officials, suggest discussions are underway for a new US-Venezuelan company to manage these resources. However, legal experts question the feasibility of such an arrangement under Venezuelan law.

Venezuela is estimated to possess around 364 billion barrels of oil equivalent reserves, among the largest crude endowments globally. A July law by President Delcy Rodriguez aimed to create a more favorable environment for private investment, allowing for up to 100% ownership without requiring PDVSA or other Venezuelan entities as partners.

The potential deal comes as Venezuela is opening its oil sector to international investment once again. Industry veteran Gustavo Baquero, who will leave his post at Harbour Energy Mexico in November, expressed his intent to focus on reviving Venezuela's energy sector. Chevron, which currently operates joint ventures with PDVSA, is reportedly planning to expand its operations in the country.

However, legal scholars have raised questions about the constitutionality and legality of a U.S. government's involvement in such a venture. David Goldwyn, chair of the Atlantic Council Global Energy Center's Energy Advisory Group, highlighted the absence of any precedent for such a scenario and questioned the commercial motivation for the U.S. to assume such a role. He suggested that the U.S. could directly influence Venezuela's fiscal framework through other means without entering into a concession agreement.

Dolores Dobarro, a professor of hydrocarbons law at the Universidad Metropolitana in Caracas, emphasized that Venezuela's constitution designates its hydrocarbon and mineral reserves as inalienable public assets. Altering these through a lease or similar arrangement would require a constitutional amendment, which would need approval via a referendum.