Venezuela’s National Assembly has passed groundbreaking legislation to liberalize state control over its oil industry, marking the most significant overhaul in decades and signaling a departure from the nationalization policies of former president Hugo Chávez.
The newly approved Hydrocarbons Law reform, introduced following the January 3rd detention of former president Nicolás Maduro by United States authorities, enables private companies to directly sell oil and maintain bank accounts in any currency and jurisdiction. While state-owned PDVSA retains majority stakes in joint ventures, minority shareholders now gain technical and operational control authority. The legislation additionally eliminates exclusive state rights for certain ancillary services, permitting private entities to subcontract oil extraction operations while assuming associated costs and risks.
To stimulate investment, particularly for new drilling activities in unexplored regions, the reform reduces royalty rates from 30% to 15%. The framework also introduces independent dispute resolution mechanisms including mediation and arbitration to enhance legal certainty for international investors.
The reform’s implementation has proven contentious, with opposition lawmakers refusing to participate in voting after receiving the proposal mere hours before parliamentary debate. Critics including economist José Guerra characterize the legislation as ambiguous and insufficiently clear regarding private ownership rights, arguing it fails to completely break from Chávez’s legacy.
Energy sector analysts note that the reforms effectively formalize existing production participation contracts (CPPs) that have already enabled private majority ownership exceeding 50%, though these arrangements have faced transparency concerns. According to former Energy Minister Rodríguez, CPP implementations since April 2024 have boosted oil production from 900,000 to 1.2 million barrels daily, attracting nearly $900 million in investments during 2025.
Industry experts maintain mixed perspectives on the reforms. Luis Oliveros, Dean of Economic Sciences at Caracas University, views positively the formalization of the Chevron model granting foreign companies operational leadership with enhanced flexibility. Conversely, Oswaldo Felizzola of the Venezuelan Center for Energy and Environment considers the updates necessary but inadequate for addressing contemporary challenges including climate change.
The legislation now proceeds to consultation phases and article-byarticle debate before final adoption. Meanwhile, cooperation with the U.S. government has already yielded economic impacts, with Venezuela receiving $300 million from crude oil sales to stabilize currency markets. Economic projections indicate potential 30% increases in oil revenues this year, aided by sanction removals enabling market-based pricing.