Leopoldo López calls for reform of Venezuelan oil and gas sector

Leopoldo López and Gustavo Baquero say reforming Venezuelan oil and gas industry are critical in Venezuela’s economic and social recovery.

Venezuelan oil & gas reforms linchpin for country’s economic, social recovery

Leopoldo López and Gustavo Baquero – co-authors of Venezuela Energética – have presented a bold new vision for Venezuela’s economic and social recovery, using dramatic reforms of oil and gas as the linchpin.

López and Baquero state that “energy reform can be the pivot point for a new economic and social contract between the people of Venezuela and their government.”

“We need a dramatically new way of thinking about Venezuela’s energy resources and a paradigm shift in how they are managed,” the authors write. “The right reform plan will not only reverse our economic decline, it can help rebuild trust, spread economic and social benefits, and create the foundation for broader development. And it can also restore confidence within the international community that Venezuela is once again a trusted partner for investment.”

The authors describe an energy roadmap that would unfold in four stages:

Maximize oil & gas production: Increase production from the current 1.9m barrels per day to 5m barrels per day by the mid-2030s. This will require a massive effort to repair and upgrade deteriorating facilities, while professionalizing the management and oversight of the industry in order to make it “investible” again.
Democratize the proceeds: Transform Venezuelans from dependents to owners by re-routing oil and gas income into individual citizen funds. The funds would receive all royalties from oil sales, a third of the income tax levied on all production, and all shareholder dividends. Whereas today the Venezuelan government funds itself directly from the proceeds of PDVSA, the authors propose that it be funded directly by the people through a 50% tax on the oil income deposited into the citizen accounts. This would make the government the beneficiary of the people – and reverse the relationship of citizen dependency that currently exists.
Diversify Venezuela’s economy: Use the oil and gas industry as a springboard to promote the development of other industries and reduce oil’s footprint over time. The authors cite the examples of other countries which have successfully nurtured new industries and a strong service sector by leveraging expertise first developed in its oil industry.
Transition to clean energy: Accelerate the transition to a low carbon-emission society, in which Venezuela exports most of its oil and uses low carbon energy for most of its internal needs. This would be accomplished by expanding hydropower and wind infrastructure, which would allow Venezuela to increase its exports of oil & gas.

Moisés Naím writes in a prologue that the authors have posed “a necessary and urgent debate. López and Baquero provoke a conversation that Venezuelans need to have now.”

The need is particularly acute because Venezuela is in the midst of a severe economic and political crisis, with hyperinflation, widespread shortages, mass hunger and growing instability. The authors cite oil as a critical lifeline and springboard that can enable Venezuela to emerge from the crisis – but only if it is managed differently.

López is an opposition leader and one of the world’s most prominent political prisoners. He was unjustly imprisoned in 2014 for denouncing the government’s violations of human rights and democratic freedoms. His contributions to the book came through handwritten notes on scraps of paper that were delivered by family members to Baquero, an oil professional with extensive international experience. López is currently under house arrest, surrounded by armed guards and prohibited from receiving visitors or speaking publicly.

Venezuela Energética is published by Editorial Dabhar, and will be available on Amazon later this month. For more information on the book and ideas, please visit the Venezuela Energética home page, or refer to the attached PDF.