January 8, 2020 / 9:11 PM / a month ago

Venezuela's Maduro seeks oil contract changes with congressional shakeup: lawmakers

CARACAS (Reuters) - Venezuela’s ruling Socialist Party hopes legislators it recently declared to be in charge of congress will approve changes to ownership of some crucial state oil assets, five opposition lawmakers said on Wednesday.

FILE PHOTO: Venezuela's President Nicolas Maduro gestures as he speaks during a news conference in Caracas, Venezuela, September 30, 2019. REUTERS/Manaure Quintero

Pro-government legislators on Sunday declared little-known politician Luis Parra as the head of congress after troops blocked opposition lawmakers from backing Juan Guaido for a second term. The defiant legislators responded by proclaiming the session null and re-elected him anyway.

Maduro wants the Socialist-backed legislators to make legal new investments by oil companies from allied countries, such as Russia, who have seen the opposition-run congress as a liability to cutting new deals.

The shift would allow for a scheme in which investors holding Venezuela’s defaulted bonds would be able to swap them for ownership stakes in the fields and recoup the debt they are owed by producing oil, said Angel Alvarado, who sits on the opposition-held National Assembly’s finance commission.

Bondholders who participate in such a swap could risk running afoul of U.S. sanctions, which broadly prohibit financial deals with the Venezuelan government.

Venezuelan law requires that the National Assembly must approve any changes to the ownership structure of the OPEC nation’s joint ventures with private companies. The opposition, which holds a majority, opposes economic reforms that could help President Nicolas Maduro hold onto power.

“Parra was put there to try to approve these oil deals,” said Jose Guerra, who also sits on the finance commission.

Russia is the only county that has backed Parra. The United States, European Union, and most Latin American countries still recognize Guaido as head of parliament.

That has led lawmakers to believe Russia, whose state oil company Rosneft is among the largest investors in Venezuela’s oil sector, could benefit from the new deals.

“These deals need National Assembly approval, and that’s why Russia’s move is suspicious,” Alvarado told reporters.

“Russia could increase its stakes in the fields,” he added, without providing evidence for the claim.

A spokesman for Parra did not respond to a request for comment.

None of the lawmakers specified which joint ventures could change ownership. Luis Stefanelli of the energy commission said Maduro was seeking new investors for fields producing well below capacity as crude production plummets due to a brain drain, underinvestment, and U.S. sanctions.

A fifth opposition lawmaker said Maduro’s main motivation was to get approval to hold early parliamentary elections and win back congress for the socialists. A financial industry source said it was unlikely major bondholders would participate in such a scheme.

Neither Venezuela’s information ministry nor PDVSA responded to requests for comment.

Reporting by Mayela Armas, Luc Cohen and Corina Pons; Additional reporting by Brian Ellsworth in Caracas; Editing by David Gregorio

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