The special regime for the operational and administrative management of the oil industry aims to increase the country’s oil production capacity.
In Official Gazette No. 41,376 dated April 12, 2018, was published the Presidential Decree No. 3,368, establishing a special and transitory regime for the operational and administrative management of the national oil industry (the “Decree”).
The purpose of the Decree is to establish a special regime, of a transitory nature, and the administrative measures in accordance with it, which contributes definitively to the increase of the productive capacities of Petróleos de Venezuela S.A. (“PDVSA”), its subsidiary companies, and the national oil industry in general. The Decree will be valid until December 31, 2018, and will be extendable for one year; The Decree will enter into force from its publication in the Official Gazette of the Bolivarian Republic of Venezuela.
The Decree grants the Ministry of Popular Power of Petroleum (the “Ministry”) the broadest powers of organization, management, and administration of the companies of the oil industry of the public sector, especially PDVSA and its subsidiary companies.
Among the powers granted by the Decree to the Ministry, are the following: (i) create, suppress or make changes to companies in the public oil industry, including PDVSA and its subsidiary companies; (ii) create, suppress, modify or centralize management, administration and supervising bodies of said companies; (iii) create and regulate one or several conglomerates of companies in the public oil sector; (iv) to fix, suppress, modify or centralize powers, procedures or management in certain companies, or to standardize them for a group of them; (v) establish general norms for the compliance of all public companies of the oil sector, or groups of them; (vi) create, suppress, modify or centralize hiring commissions; (vii) establish standards and procedures for registration, hiring and suspension of clients and suppliers; or proceed directly to the suspension of the record or registration by reasoned act; (viii) establish norms and special contracting procedures by category of products, goods or services; and (ix) order the amendment of the bylaws of the public companies of the oil sector, their procedures manuals, internal regulations and other existing internal governance instruments.
The representatives, directors or managers of the companies of the national oil industry of the public sector, will be obliged to manage what is conducive to the materialization of the modifications that must be made in accordance with the instructions of the Ministry. The procedures related to the registration and record of documents related to such modifications are mandatory for those responsible for each of the companies involved.
The Decree provides that reforms, regulations or statutes, ordered by the Ministry may modify the provisions of the respective decrees for the creation of companies in the public oil sector.
The Decree provides that PDVSA and its subsidiary companies will contract through the price consultation modality, regardless of the amount of the purchase of goods, acquisition of services or execution of works, in the following categories of products: (i) the purchase of hydrocarbons and their derivatives, diluents, gas, natural gas liquids, petrochemicals, inputs for the production of fuels and lubricating bases, materials for the wrapping and packaging of products; (ii) the execution of complementary infrastructure works for the provision of services, transfers for the oil industry; and (iii) acquisition and supply of food services, transportation, chartering of ships for crude oil, gasoline, gas and asphalt pavements, communication systems, equipment and computer licenses, systems and equipment for integral protection, systems and equipment for protection against fires.
In addition, the Decree also provides that PDVSA and its subsidiaries will proceed with the purchase, acquisition and execution of works through direct award, in the following cases: (i) the purchase of materials and chemical products, spare parts and equipment related to the activities of the oil industry: drilling, well services, pumping facilities, production stations, compressor plants and electrical systems, pipelines, gas pipelines and pipelines that allow the operation of the industry, chemicals and catalysts, oils, lubricants, lubricant bases and additives, equipment and spare parts of the land vehicle fleet (light and heavy) maritime and air, power generation systems, turbo generators, turbo compressors, motor compressors and control systems, production clusters, equipment manufacturing and accessories; (ii) the execution of the necessary infrastructure work for the oil industry; and (iii) the acquisition of integral services of drilling, well maintenance, cleaning, stimulation, gun perforation, completion, maintenance of facilities, compressor plants, production stations, production tillage, gas and crude lines, pipelines, gas pipelines and products pipelines, services to breeders, electrical generation systems, storage kicking, storage and packaging terminal, acquisition and maintenance of service to monobuoys, marine terminals, docks, offshore production platforms, loading and unloading platforms for ships, power plants, gas processing, NGL fractionation and extraction plants, gas injection plants, transportation systems, gas handling and distribution, industrial steam services, water and electricity, maintenance of the intermediate plants of the national refining system, maintenance of the units of catalytic cracking, maintenance of distillation units, man maintenance of process trains, maintenance of deep units of the conversion circuit.
For the purpose of controlling the purchasing procedures of the regime established in the Decree, the Minister shall provide quarterly information to the President of the Republic and notify the Comptroller General of the Republic regarding the execution of the Decree.
The Decree establishes that the Minister, by means of an administrative act, may resolve the cessation of the application of the regime and the special temporary administrative measures provided for in the Decree.
This Legal Report presents a general description of the most relevant aspects of the Decree No 3,368 and does not constitute a legal opinion directed to attend a specific situation. In case of any doubt, comment, or to obtain further information, please contact us through our website www.interjuris.com.
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