Venezuela’s acting president signs oil industry overhaul, easing state control to lure investors

CARACAS, Venezuela (AP) — Venezuela’s acting President Delcy Rodríguez on Thursday signed a law that will open the nation’s oil sector to privatization, reversing a tenet of the self-proclaimed socialist movement that has ruled the country for more than two decades.

Lawmakers in the country’s National Assembly approved the overhaul of the energy industry law earlier in the day, less than a month after the brazen seizure of then-President Nicolás Maduro in a U.S. military attack in Venezuela’s capital.

As the bill was being passed, the U.S. Treasury Department officially began to ease sanctions on Venezuelan oil that once crippled the industry, and expanded the ability of U.S. energy companies to operate in the South American nation, the first step in plans outlined by Secretary of State Marco Rubio the day before. The license authorization by the Treasury Department strictly prohibits entities from China, Russia, Iran, North Korea or Cuba from the transactions.

The moves by both governments on Thursday are paving the way for yet another radical geopolitical and economic shift in Venezuela.

“We’re talking about the future. We are talking about the country that we are going to give to our children,” Rodríguez said.

Rodríguez proposed the changes in the days after U.S. President Donald Trump said his administration would take control of Venezuela’s oil exports and revitalize the ailing industry by luring foreign investment.

• 0111 2026 SK Oil Show booth promo 01
  0111 2026 SK Oil Show booth promo 01
• 0085 Turnbull snow removal call office
  0085 Turnbull snow removal call office
• 0110 SaskEnergy SEI_Network_Members_Burn_Brighter
  0110 SaskEnergy SEI_Network_Members_Burn_Brighter
• 0109 SaskPower SASPO_2817_PLT_Recruitment_DIVERSITY
  0109 SaskPower SASPO_2817_PLT_Recruitment_DIVERSITY
• 0105 SaskEnergy Commitment to Safety
  0105 SaskEnergy Commitment to Safety
• 0102 Lori Carr Coal Extended
  0102 Lori Carr Coal Extended
• 0100 Turnbull Project Manager
  0100 Turnbull Project Manager
• 0099 Mryglod Steel 1080p
  0099 Mryglod Steel 1080p
• 0097 Eagle Sky Ventures LTD
  0097 Eagle Sky Ventures LTD
• 0095 Fast Trucking nearly 70 years good at it
  0095 Fast Trucking nearly 70 years good at it
• 0092 Turnbull projects big and small
  0092 Turnbull projects big and small
• 0046 City of Estevan This is Estevan Teaser
  0046 City of Estevan This is Estevan Teaser
• 0077 Caprice Resources Stand Up For Free Speech
  0077 Caprice Resources Stand Up For Free Speech
• 0061 SIMSA 2024 For Sask Buy Sask
  0061 SIMSA 2024 For Sask Buy Sask
• 0051 JML Hiring Pumpjack assembly
  0051 JML Hiring Pumpjack assembly
• 0049 Scotsburn Dental soft guitar
  0049 Scotsburn Dental soft guitar
• 0041 DEEP Since 2018 now we are going to build
  0041 DEEP Since 2018 now we are going to build
• 0032 IWS Summer hiring rock trailer music
• 0022 Grimes winter hiring
• 0021 OSY Rentals S8 Promo
• 0018 IWS Hiring Royal Summer
• 0013 Panther Drilling PO ad 03 top drive rigs
• 0002 gilliss casing services
  0002 gilliss casing services
• 9002 Pipeline Online 30 sec EBEX
  9002 Pipeline Online 30 sec EBEX
• 9001

Private companies to control oil production

The legislation promises to give private companies control over the production and sale of oil and allow for independent arbitration of disputes.

Rodríguez’s government expects the changes to serve as assurances for major U.S. oil companies that have so far hesitated about returning to the volatile country. Some of those companies lost investments when the ruling party enacted the existing law two decades ago to favor Venezuela’s state-run oil company, Petróleos de Venezuela SA, or PDVSA.

The revised law would modify extraction taxes, setting a royalty cap rate of 30% and allowing the executive branch to set percentages for every project based on capital investment needs, competitiveness and other factors.

It also removes the mandate for disputes to be settled only in Venezuelan courts, which are controlled by the ruling party. Foreign investors have long viewed the involvement of independent courts as crucial to guard against future expropriation.

Will change Venezuela’s economy

Ruling-party lawmaker Orlando Camacho, head of the assembly’s oil committee, said the reform “will change the country’s economy.”

Meanwhile, opposition lawmaker Antonio Ecarri urged the assembly to add transparency and accountability provisions to the law, including the creation of a website to make funding and other information public. He noted that the current lack of oversight has led to systemic corruption and argued that these provisions can also be considered judicial guarantees.

Those guarantees are among the key changes foreign investors are looking for as they weigh entering the Venezuelan market.

“Let the light shine on in the oil industry,” Ecarri said.

Some oil workers support overhaul

Oil workers dressed in red jumpsuits and hard hats celebrated the bill’s approval, waving a Venezuelan flag inside the legislative palace and then joining lawmakers in a demonstration with ruling-party supporters.

The law was last altered two decades ago as Maduro’s mentor and predecessor, the late Hugo Chávez, made heavy state control over the oil industry a pillar of his socialist-inspired revolution.

In the early years of his tenure, a massive windfall in petrodollars thanks to record-high global oil prices turned PDVSA into the main source of government revenue and the backbone of Venezuela’s economy.

Chávez’s 2006 changes to the hydrocarbons law required PDVSA to be the principal stakeholder in all major oil projects.

In tearing up the contracts that foreign companies signed in the 1990s, Chávez nationalized huge assets belonging to American and other Western firms that refused to comply, including ExxonMobil and ConocoPhillips. They are still waiting to receive billions of dollars in arbitration awards.

From those heady days of lavish state spending, PDVSA’s fortunes turned — along with the country’s — as oil prices dropped and government mismanagement eroded profits and hurt production, first under Chávez, then Maduro.

The nation home to the world’s biggest proven crude reserves underwent a dire economic crisis that drove over 7 million Venezuelans to flee since 2014. Sanctions imposed by successive U.S. administrations further crippled the oil industry.

___

Follow AP’s coverage of Latin America and the Caribbean at https://apnews.com/hub/latin-america