By Jeremy Morgan
Latin American Herald Tribune staff

CARACAS – Legislation to empower Pequiven – a subsidiary of the state oil corporation, Petróleos de Venezuela (PDVSA) – to take controlling interests throughout the petrochemicals industry has zoomed through the National Assembly and is said to be just one step away from becoming the law of the land.

Hard on the heels of the first debate on June 4, the legislation was pushed through a second debate last Tuesday with not so much in the way of further discussion, much less amendment, either in the energy and mines committee or in the full chamber. The legislature is dominated by an overwhelming majority of Chávez’s ruling United Socialist Party of Venezuela (PSUV).

Whether the second debate wrapped in the formality of a final vote on the legislation as a whole wasn’t immediately clear. But were that the case, all that would be required now would be for President Hugo Chávez to put his signature to the legislation and promulgate it by publishing it in the Gazeta Oficial.

Officials say that the legislation gives Pequiven legal right to take a 51% interest in private sector petrochemicals companies in the country. However, industry sources regarded this as a likely minimum, noting that the government line is that the state is to have “the decisive weight in the operational area of these companies.”

Pequiven President Saúl Ameliach was reported to have spoken of setting “clear rules of the game” about the “important investments the government is planning to make in the industry.” He also said that plans were to seek private partners to form “mixed companies.”

Presumably, what the government has in mind are the companies which will be required to surrender a majority stake to Pequiven. The question then is whether they would be willing to do so – and following on from that, what would happen if they weren’t, or considered government offers of compensation inadequate.

If what happened in the oil industry were anything to go by, companies could find themselves totally out in the cold and battling for compensation. This time, at least under the legislation as it currently stands, there would be no provision for opting for international arbitration; the text specifically rules that out.

Rather, the legislation stipulates that only Venezuelan courts or panels can resolve any such disputes. There are doubts about the legality of this, and whether it could be made to work in practice, so the prospect of litigation looms in some minds at least. Legal experts say that one party will not be able to unilateral amend agreements for parties that had arbitration clauses in their original contracts

Doubts about the government’s real intentions for the petrochemicals sector deepened after a statement during the second debate by the head of the energy and mines committee, Deputy Ángel Rodríguez.

For reasons of “national, economic and strategic sovereignty,” he declared, the state would have the right to “the totality of petrochemicals shares in the country, or of whatever other entity that was created expressly for the management of the industry.”

To some observers, that sounded not unlike 100%. But it wasn’t long before a flurry of hands rose in the air.

Furthermore, the legislation reserves the right for the state to control basic and intermediate activities, assets and facilities in the industry. It also specifies that the Energy and Oil Ministry will decide on issues such as “regulation” of the industry.

Rodríguez said that the jobs of workers employed by petrochemical companies were “guaranteed.” They would be covered by a collective bargaining agreement as were employees at PDVSA, he said.

In Zulia state, west Venezuela, uncertainty continues over the fate of what’s said to be a large proportion of the 8,000 people who worked for the oil field service companies taken over by Chávez on May 7.

PDVSA is says is putting them on its payroll, but only at a rate of a thousand a week, according to PDVSA President Rafael Ramírez who is also Energy and Oil Minister. But reports say this doesn’t actually seem to be happening. And in addition, there’s continuing concern about the prospects for 100,000 or more people in the region who relied in some indirect way on the oil field services industry to make their living.

All is not quiet on the labor front at the state oil outfit. Officials at the Unified Federation of Oil Workers, Futpv, warned that they could boycott internal union elections because of the “recurrent obstacles” set up by a rival union they said was actually run by PDVSA