Venezuela ends 20 years of state oil control with new law

Friday 30 January 2026 - 09:50

By: Dakir Madiha

Venezuela ends 20 years of state oil control with new law

Venezuela's National Assembly approved a sweeping overhaul of the country's hydrocarbons law on Thursday, dismantling over two decades of state dominance in the oil sector and opening the door to private investment in the world's largest proven crude reserves. The vote signals a dramatic break from the socialist economic model that has shaped Venezuela since former President Hugo Chávez nationalized the industry in the mid-2000s. The legislation comes less than a month after U.S. forces captured then-President Nicolás Maduro in Caracas on January 3.

The reformed law allows private firms to control oil production and sales for the first time since nationalization, permits international arbitration for disputes instead of Venezuelan courts alone, and gives the government flexibility to adjust royalty rates based on project viability. Royalties cap at 30% but can drop to 15% for otherwise uneconomic ventures. It replaces extraction taxes with a new "integral" hydrocarbons tax up to 15% on gross production.

Interim President Delcy Rodríguez, who proposed the changes on January 15, said the reforms aim to draw foreign investment to revive the battered oil industry. Venezuelan output has plummeted from nearly 3 million barrels per day in the 1990s to about 900,000 daily. Assembly President Jorge Rodríguez, Delcy's brother, urged lawmakers to back the measure to lure foreign capital. "This will change the country's economy," said ruling party deputy Orlando Camacho.

Investors and the Trump administration remain wary. U.S. Secretary of State Marco Rubio called the proposal "potentially insufficient to attract the foreign investment needed for meaningful rebuilding of Venezuela's oil industry." At a White House meeting earlier this month, Exxon Mobil CEO Darren Woods deemed Venezuela "impossible to invest in," demanding "durable investment guarantees" before returning to a nation that seized its assets twice.

Chevron, the sole major U.S. oil producer still operating there, expressed readiness to boost output 50% within 18 to 24 months via existing joint ventures. Valero Energy announced Thursday deals with three approved Venezuelan crude suppliers, expecting it to form a "significant portion" of its heavy crude supply in February and March.

Opposition deputy Antonio Ecarri backed the reform but demanded transparency, calling for public disclosure of funding and contracts. "Let there be light on the oil industry," he said. Some lawmakers criticized provisions stripping the Assembly of contract approval power, centralizing authority in the oil ministry under Rodríguez. "The goal of this reform is to further diminish the National Assembly's oversight capacity," said deputy Henrique Capriles.

President Donald Trump has demanded $100 billion in investment to rebuild Venezuela's energy sector, though industry leaders at a January 9 White House meeting offered no firm commitments.