CARACAS: An overhaul of Venezuela's constitution being prepared by the pro-government Constituent Assembly will likely include changes intended to attract private investment in the country's oil fields, according to two assembly members.
Production by the OPEC nation's oil industry is at a 60-year low, leaving President Nicolas Maduro's government strapped for cash as it grapples with hyperinflation and a fifth year of economic contraction.
The Constituent Assembly, whose powers supersede those of the country's Congress, would reword some articles of the constitution to reduce emphasis on state control of oil and ease the way for private investment, the assembly members said.
"We must take into account the economic situation of the country. You need investments to recover production," said Assemblyman David Paravisini.
Assembly colleague Hermann Escarra echoed Paravisini.
"There is an opening, always with the state maintaining a majority, (but) not opposed to foreign investments," said Escarra, a lawyer.
Late socialist leader Hugo Chavez boosted state control over the oil industry through a wave of nationalizations that ultimately led to underinvestment in oil fields. Chavez also used oil revenue to pay for social programs instead of reinvesting in the industry.
Seeking to stem production declines, Venezuela this month agreed to hand over at least seven oil fields to private companies through contracts similar to ones rolled back under Chavez, according to two sources and an internal document.
The 1999 constitution says oil industry activity is "reserved" for the state, while the 2001 Hydrocarbons Law requires that exploration and production be carried out by state-majority joint ventures.
Paravisini and Escarra said the assembly would first make changes to constitutional language.
That would be followed by legal reforms to give joint ventures more favourable operating conditions and encourage private investment in services companies.
Both declined to elaborate further.
They said they will submit their proposals within a month to Constituent Assembly President Diosdado Cabello, a powerful Socialist Party politician who will decide the reforms to be discussed.
Maduro would have to sign off on any changes, Paravisini stressed.
Venezuela's Information Ministry and PDVSA, the state oil company, did not respond to a request for comment.
Foreign oil companies are likely remain skeptical even in the face of significant legal reforms.
Venezuela also faces U.S. financial sanctions and more than a dozen international arbitration cases by companies seeking compensation for nationalizations, and it has defaulted on billions of dollars in foreign debt.
(Writing by Alexandra Ulmer; Editing by Brian Ellsworth)