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Royalty rates would become flexible, can be lowered to 15%

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Independent arbitration to be added as dispute-solving

mechanism

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Production-sharing contracts to be formalized in law

Jan 22 (Reuters) - A sweeping proposed reform of

Venezuela's hydrocarbons law would allow foreign and local

companies to operate oilfields on their own through a new

contract model, commercialize ‌output and receive sale proceeds

even if acting as minority partners of state company PDVSA,

drafts seen by Reuters on Thursday showed.

Venezuela's interim ​President Delcy Rodriguez last week

submitted the reform proposal to the National Assembly. It is

expected to ‍overhaul the OPEC country's oil industry by changing

former President Hugo Chavez's ⁠landmark oil law.

Lawmakers are ⁠scheduled to begin discussion on the reform on

Thursday, following a 50-million-barrel oil supply deal between

Caracas and Washington this month. The ‌deal, agreed after the

U.S. capture of President Nicolas Maduro, ​gives the U.S. control

of the country's main revenue source, U.S. President Donald

Trump has said.

The National Assembly, led by the interim president's

brother, Jorge Rodriguez, has only ⁠a small number of opposition

lawmakers and has not ‍been formally ​recognized by the U.S.,

following doubts about its legitimacy.

OIL COMPANIES, INVESTORS DEMAND AUTONOMY

Oil executives and potential investors, as part of Washington's

ambitious $100 billion reconstruction plan for Venezuela's

energy industry, are demanding ‍autonomy to produce and export

oil, and receive the cash sale proceeds after Chavez's

nationalizations and assets expropriations two decades ago.

Independent lawyers have warned, however, that the sweeping

reform conflicts with Venezuela's Constitution, which reserves

the oil industry's main activities for the state. The reform

also needs many related laws approved under Chavez and Maduro to

be scrapped, they said.

Some experts have said the contract model proposed by

Rodriguez, ​which allows ‍companies to independently produce and

export oil through contracts with PDVSA, is contrary to the

joint venture model on which the hydrocarbons law is based.

Those contracts, pushed by Maduro with ​little success and

whose details were never disclosed publicly, led to the entrance

of small operators into Venezuela's oilfields in recent years

despite U.S. sanctions.

"Companies operating will handle administration at their own

risk and expense. In this model, the state does not acquire

debts, and remuneration is based on a percentage of volumes

(produced)," a summary of the reform expected to be presented on

Thursday and seen by Reuters said, referring to the

production-sharing contract model.

The proposal would ​allow the government to lower royalties

and related taxes to 15% from 33% for special projects and those

requiring massive investments.

It adds the possibility of resorting to independent

arbitration to solve disputes, a longstanding request from

foreign companies after disagreements and lawsuits aimed ‍at

claiming compensation for assets expropriated in Venezuela.