PdV’s planned demise confirmed: Update 24 Oct 2018 22:52 (+01:00 GMT) Adds confirmation of PdV board changes. Caracas, 24 October (Argus) — A draft text of proposed constitutional reforms obtained by Argus confirms that Venezuela's government-controlled constituent assembly (ANC) plans to replace state-owned oil company PdV with a new state-owned entity. PdV would be "eliminated" and replaced with "a new body" but the state will not relinquish ownership of the country's oil and gas assets and control over all related activities, the draft constitutional text says. "The state, for reasons o

PdV’s planned demise confirmed: Update 24 Oct 2018 22:52 (+01:00 GMT)

Adds confirmation of PdV board changes.

Caracas, 24 October (Argus) — A draft text of proposed constitutional reforms obtained by Argus confirms that Venezuela's government-controlled constituent assembly (ANC) plans to replace state-owned oil company PdV with a new state-owned entity.

PdV would be "eliminated" and replaced with "a new body" but the state will not relinquish ownership of the country's oil and gas assets and control over all related activities, the draft constitutional text says.

"The state, for reasons of national strategy and political and social-productive sovereignty, will conserve the totality of PDVSA's shares while a new organism or entity is created to manage the oil industry including its subsidiaries, strategic associations and joint ventures," according to Article 342 of the proposed constitution, which would replace the existing 1999 constitution.

Article 340 of the draft text says the state will retain full control over all "hydrocarbons exploration and production activities."

The word "hydrocarbons" as defined in the text includes crude oil and gas, an ANC official tells Argus.

Article 343 of the draft constitutional text says PdV will retain a majority stake and decision-making control over all exploration and production joint ventures with foreign companies.

"When the state exercises exploration and production activities in joint ventures…the state always will maintain control of the joint venture including the capacity to make decisions under the direction of the responsible ministry," the article says.

Article 341 prioritizes labor's direct involvement and participation in the "use of national technologies, science and techniques." The article also states that "foreign technology will only be used when national technology does not exist or when national technology is insufficient."

Article 344 alludes to likely reforms of existing oil and gas laws to ensure compliance with the new constitution's framework for oil and gas ventures.

The draft text suggests that the government would increase control over natural gas in particular by requiring state control over joint ventures, as is the case with oil ventures. This would potentially impact the Cardón 4 joint venture that produces gas from the giant offshore Perla field. The only shareholders in Cardón 4 are European firms Repsol and Eni. PdV is the sole offtaker.

As Argus reported yesterday, the creation of a new entity could be a maneuver to spin off PdV's enormous liabilities. But the text does not appear to make reference to the company's debt which is currently all in default except for a 2020 bond on which the firm owes some $950mn on 27 October.

It is not clear who is drafting the new charter, or when the draft will come to a vote. The

ANC is a rubber-stamp body that replaced Venezuela's opposition-controlled national assembly in 2017.

The government is apparently seeking to complete the constitutional text and possibly subject it to a popular referendum before 10 January 2019, when president Nicolas Maduro's current term ends.

The proposed constitutional changes emerged at the same time that PdV´s new board of directors was confirmed in the Official Gazette, dated 22 October but published today.

The new team of board vice presidents heading up key business units reshuffles or replaces short-lived appointments, as reported by Argus on 17 October. One difference with preliminary details is the retention of Nemrod Contreras as head of gas, rather than Rosa Mota.

Miguel Quintana is the new head of upstream as well as planning. Rodolfo Jiménez heads refining, while José Rojas heads trading and supply, and Fernando Quintal is in charge of finance. https://www.argusmedia.com/pages/NewsBody.aspx?id=1779397&menu=yes?utm_source=rss%20Free&utm_medium=sendible&utm_campaign=RSS

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