Venezuela’s legislature gave initial approval Thursday to a bill that would loosen decades of state control over the country’s vast oil sector, opening the door to private companies operating fields independently and settling disputes in international courts. The bill represents the first major overhaul of the oil industry since late socialist leader Hugo Chávez nationalized portions of it in 2007. The measure follows intense pressure from the Trump administration, which has pushed the government of acting President Delcy Rodríguez to invite greater investment from U.S. energy companies in Venezuela’s flagging oil industry.
The bill signals a significant departure from the resource nationalism that has been central to Venezuela’s socialist project. The opening to private investment reflects the geopolitical realignment following former President Nicolás Maduro’s capture earlier this month.
The legislation would formally break decades of state command over some of the world’s largest oil reserves. It would allow private companies to independently operate oil fields, market their own crude output, and collect cash revenues through contracts with Petróleos de Venezuela, the state-run oil company.
The bill also provides companies the option of settling investment disputes through international arbitration rather than only through Venezuelan courts—a guarantee widely seen as essential to attract foreign investment. Additionally, it would allow the government to reduce royalties from the current 30% to as low as 15%, and cut extraction taxes, in an effort to persuade companies to undertake difficult projects in underdeveloped fields.
Lawmakers Advance the Measure
At Thursday’s legislative session, National Assembly President Jorge Rodríguez told lawmakers the bill aims to “allow an accelerated increase in production” of oil. “Oil under the ground is useless,” he said, emphasizing the need to boost output and open exploration opportunities. After about two hours of discussion, lawmakers gave initial approval and advanced the measure to a second round of debate.
Orlando Camacho, a lawmaker and head of Venezuela’s Fedeindustria business association, said the bill ensures “that oil continues to be the driving force of our country’s development.” He described the legal guarantees as necessary to attract private investment, calling them “a bold step.”
U.S. Pressure Escalates
The Trump administration has intensified pressure on President Rodríguez and other members of the government that succeeded Nicolás Maduro after his capture earlier this month. Administration officials have sought to expand opportunities for U.S. energy companies to invest in Venezuela’s flagging oil sector.
Investor Barriers Remain
Yet potential investors face significant hurdles. Companies including Exxon had assets seized when Hugo Chávez nationalized portions of Venezuela’s oil industry in 2007. Those companies have pursued compensation for billions of dollars in losses for nearly two decades without success.
Political uncertainty compounds investor concerns. No timeline has been set for democratic elections in Venezuela, as Rodríguez works to consolidate control. Additionally, President Trump has not indicated when the U.S. will lift the sanctions he imposed in his first term to weaken the Maduro government, adding another layer of risk to foreign investment in Venezuela’s oil sector.