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Julio Borges, the head of Venezuela’s National Assembly, ripped up a resolution on Thursday that would have allowed President Nicolas Maduro to approve oil ventures without congressional oversight.
The resolution had been designed to increase foreign investment in the country’s struggling oil industry. The last 2.5 years of low oil prices have slashed government revenues, causing mass shortages of day-to-day products and medical supplies, all of which were imported using energy profits in the past.
Gas shortages suggests that problems for Venezuela’s state-owned oil company PDVSA are deepening. The government depends on oil production for more than 90 percent of its export revenues, and the collapse of oil prices back in 2014, coupled with a long-term slide in output, have ruined the company’s finances.
To ease economic woes, Caracas’ PDVSA offered Russian oil company Rosneft a stake in a joint venture earlier this month, which will bring the two nations’ closer together geopolitically. New drilling, coupled with rising oil prices, will fund new shipments of essential goods.
The Venezuelan constitution currently requires congressional approval for contracts of “national public interest” with companies of foreign origin, but a high court recently ruled that joint ventures did not require the oversight required by the foundational document.
In turn, lawmakers have taken to attacking the legitimacy of the court system.
The infighting has increased political risk and reduced foreign interest in investment in the South American nation. Russia entered the equation in the past year as a key financier of Maduro’s activities.
Related: Maduro’s Last Stand: Military Takes Over Struggling Oil Sector
Additional loans or projects with Rosneft could help Venezuela meet $2.5 billion in bond payments due in April, in addition to other public sector costs.
"External forces should not add fuel to the fire to the conflict inside Venezuela," the Russian government said on Friday, signaling Moscow’s burgeoning say in Caracas’ inner workings.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…