Venezuela president wins power over oil despite court reversal

PanARMENIAN.Net - The Venezuelan Supreme Court may have amended part of its explosive decision to take over the opposition-led congress, but it still gives embattled leftist President Nicolas Maduro broad new powers over the OPEC nation's vast oil wealth, Reuters reports.

The reversal on Saturday, April 1 came after political leaders worldwide and street protesters at home accused the pro-government court of effectively making Maduro a dictator.

While the court backed off its Wednesday decision to fully take over the legislative branch, it left in place sweeping new authority for Maduro to cut oil deals on behalf of PDVSA, the state-run oil company, without congressional approval.

Maduro's cash-strapped government now has the autonomy to sell stakes in Venezuela's oil fields, which contain the world's largest reserves, or launch new joint ventures with foreign firms.

The court action sets the stage for a protracted legal and political fracas that could spook foreign investors and further undermine the nation's efforts to stabilize PDVSA, said opposition lawmakers and industry experts. The state-run firm is already reeling from lower oil prices, a cash-flow crisis and chronic operational problems that have crippled its ability to serve customers worldwide.

The fight centers on a constitutional requirement that the National Assembly approve PDVSA contracts of "national public interest" with outside companies. In addition to Maduro's legislative opponents, Venezuela's attorney general - a longtime government ally - has called the court decision to bypass the assembly unconstitutional.

The legislature - which has been controlled by members opposing Maduro's government since late last year - has warned investors that oil deals would be invalid without assembly approval.

Opposition lawmakers slammed state-run Russian oil major Rosneft (ROSN.MM), for instance, after it paid $500 million last year to increase its stake in the Petromonagas joint venture, to 40 percent from 16.7 percent, without legislative approval.

Rosneft - a major PDVSA partner at a time when relations between Caracas and Moscow have grown increasingly cozy - said the deal was legal. But the episode underscored the potential legal quagmire for investors.

Following the court's action on Saturday, opposition leaders vowed to continue challenging the validity of oil deals it has not approved.

"This is desperation for dollars," opposition lawmaker Elias Matta, the vice-president of the congressional energy and oil commission, told Reuters. "Let it be clear that any company created under this scheme will be null - totally null."

Venezuela's Information and Oil Ministries, along with PDVSA, did not immediately respond to a request for comment.