Venezuela’s National Assembly Enacts Major Reform to Oil Law to Attract Private and Foreign Investment

The reform modifies 35 key articles of the 2001 Hydrocarbons Law, creating a legal framework that enhances investment security and incorporates modern dispute resolution mechanisms. Notably, the government permits private Venezuelan and foreign companies to directly manage exploration, extraction, and production activities under contracts with the state or its affiliates. Previous restrictions that kept operational control largely with the state-owned PDVSA have been eased, allowing minority partners in joint ventures to assume operational leadership and market their production independently, subject to government authorization. The law institutionalizes up to 25-year contract terms with possible 15-year extensions and grants the state “right of first refusal” in asset transfers, ensuring ownership remains public.

Financially, the reform introduces an integrated hydrocarbon tax capped at 15% on gross revenues, calculated on a project-by-project basis to maintain economic balance. A royalty rate of up to 30% remains in place, but with increased flexibility for adjustments according to investment scale and competitive benchmarks. The legislation abolishes legacy charges such as the Tax on Large Wealth and various special contributions, improving cash flow for operators and enhancing project profitability. It also exempts oil activities from state and municipal levies.

The law codifies the validity of contracts under the Anti-Blockade Law, facilitates arbitration and mediation for dispute resolution, and endorses “greenfield” investments by easing economic conditions for developing new fields. It reinforces commitments to environmental protection and the sovereignty of national hydrocarbon resources. The legislative move follows the January U.S. operation capturing then-President Nicolás Maduro, after which U.S. authorities expressed intentions to reopen Venezuela’s oil sector to international investors.

The reform, supported unanimously by the chavista-controlled assembly and signed by interim President Delcy Rodríguez, represents a historic pivot from the nationalization era initiated almost 50 years ago. It aims to resurrect one of the world’s largest proven oil reserves through a more open, competitive, and adaptive legal regime, positioning Venezuela to attract essential foreign capital and technical expertise in a highly challenging market and geopolitical environment.