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Exploration and production

Rights

Who holds the rights to oil and gas reserves in your jurisdiction?

According to the Constitution, the republic owns all natural resources in its territory.

Upstream non-associated natural gas activities may be performed by:

  • the state;
  • a state-owned company; or
  • national or international companies that hold an exploration and production licence granted by the ministry.

Upstream oil activities may be conducted by:

  • the state;
  • a state-owned company; or
  • a mixed company with private and government participation, in which the government must have control of decision-making by owning a shareholding interest greater than 50%.

Is there a distinction between surface and sub-surface rights?

There is no difference between surface and sub-surface rights according to Venezuelan legislation.

What rules and procedures govern the grant of rights for exploration and production purposes (eg, through licences, leases, concessions, service contracts, production sharing agreements)?

The basic terms and conditions for the exploration and exploitation of non-associated natural gas reservoirs are provided by:

  • the licence that grants the licensee the right to perform the activities;
  • the Gaseous Hydrocarbons Law; and
  • the law’s regulations.

The basic terms and conditions for the performance of upstream activities in the oil industry are provided by:

  • the Framework Agreement for the Incorporation of the Mixed Company;
  • the National Assembly Accord for the Incorporation of the Mixed Company;
  • the Mixed Company Creation Decree;
  • the Mixed Company Transfer Decree;
  • the Delimited Area Resolution; and
  • the Organic Hydrocarbons Law.

What criteria are considered in awarding exploration and production rights (eg, are there any restrictions on the participation of foreign investors/companies)?

The applicable legislation for oil and gas activities provides no restriction regarding the participation of foreign companies.

According to the legislation, the Ministry of the People’s Power for Petroleum is entitled to set the criteria (eg, financial expertise, operational experience and the possibility to introduce new technologies into the country) for the selection of the participants in any specific bidding round. However, the ministry has selected participants for the latest oil and gas projects through direct award, which is possible according to the applicable legislation.

Joint ventures

Do any special legal provisions apply to joint ventures?

A mixed company joint venture can perform upstream activities in the oil industry. Such companies must comply with all the provisions for incorporation provided in the Organic Hydrocarbons Law.

The Gaseous Organic Hydrocarbons Law provides no regulations regarding joint ventures.

Third parties

Can exploration and production rights be transferred to third parties?

There are specific procedures in Venezuelan legislation regarding the assignment of upstream rights to a third party.

In general, the assignment requires prior written authorisation by the ministry in order to be valid.

Fracking

Is hydraulic fracturing (‘fracking’) permitted in your jurisdiction?

There is no provision banning hydraulic fracturing in Venezuela.

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