*

Authorities can approve asset transfers, outsourcing of

oilfield

operation after sweetened terms

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New hydrocarbon tax introduced, income tax can be lowered

for

energy projects

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Oil ministry gains power to approve, change contracts

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Washington eased sanctions on the country

By Marianna Parraga

Jan 29 (Reuters) -

Lawmakers approved in a final vote on Thursday a sweeping

reform of Venezuela's main oil law after sweetening a proposal

by interim President Delcy Rodriguez to lower taxes, expand the

oil ministry's decision power, grant ‌autonomy for private

producers and make possible asset transfers and outsourcings.

The changes are expected to encourage increases in oil and gas

production and foreign investment following a $100 billion

reconstruction plan for the ​industry proposed by U.S. President

Donald Trump this month after the U.S. military captured

Venezuelan President Nicolas Maduro.

The fast-tracked reform to the backbone ‍of the country's oil

industry follows 20 years of strict nationalization and

expropriation of assets previously owned ⁠by foreign companies

including U.S. oil majors ⁠Exxon Mobil and ConocoPhillips ( COP )

, which have not been fully compensated after years of

arbitrations and lawsuits.

"We have achieved the unanimous approval of a hydrocarbons

law reform that will make hiring ‌domestic and foreign companies

to extract resources from the world's largest oil ​reserve more

competitive," said National Assembly President Jorge Rodriguez.

As promised by U.S. officials, Trump's administration eased

sanctions on the Venezuelan energy industry related to its oil

exports through a general license shortly after the reform

approval.

The proposal was submitted, ⁠discussed and approved in less than

two weeks. Trump said he would ‍control Venezuela's oil ​revenue

indefinitely following a flagship $2 billion supply deal between

Caracas and Washington.

Many potential oil investors viewed the reform as

"good enough"

to encourage initial investment to recover the OPEC

country's depleted industry, while former Venezuelan officials

have called it unconstitutional.

The new law will allow ‍private producers to operate projects

under new oil contracts or in joint ventures, even if they are

the minority stakeholders. They are gaining long-sought autonomy

to commercialize output and cash proceeds out of state company

PDVSA's control.

The reform also formalizes an oil production sharing model first

introduced by Maduro and negotiated with little-known energy

firms in recent years. Politicians and experts have warned about

the secrecy of those deals and the potential for corruption due

to loose regulation.

Changes to the text added in recent days prepared the

ground for reducing the income tax for energy projects ​and

removed a ‍series of extra taxes. But a new 'hydrocarbon tax' yet

to be regulated in separate legislation was introduced, casting

doubts about Caracas' intention of really lowering the

government's take, among the highest in Latin America.

Proposals made at the last minute by opposition ​lawmakers to

grant transparency, limit the ministry's powers and maintain the

National Assembly approval power for oil contracts were

rejected.

The legislature's energy committee received some 120

proposals to modify the law, said lawmaker Orlando Camacho, who

is allied with the government.

Washington did not recognize the legitimacy of the election

of Venezuela's National Assembly. The U.S. also rejected other

voting processes in the country that had little participation

and a lack of international observation.

MORE FLEXIBILITY

The possibility of transferring oil assets currently owned

and operated by state oil firm PDVSA, and to outsource the

operation of oilfields under the new contract model was added

recently to the reform.

Those production-sharing contracts ​are expected to be

signed as the government makes an evaluation over the next six

months of dozens of PDVSA-controlled oil and gas joint ventures,

the model that has dominated the industry since the previous

hydrocarbons law was approved in 2001.

The National Assembly lost its previous approval authority

over contracts, with the oil ministry - currently also

controlled by Rodriguez - taking ‍over almost all power to sign

contracts and greenlight any term changes.

(Reporting by Reuters and Marianna Parraga; Editing by Julia

Symmes Cobb and Iñigo Alexander)