Venezuela’s acting President Delcy Rodríguez signed a law Thursday that overhauls the country’s oil industry and reverses a central feature of a socialist model that has governed Venezuela for more than two decades, according to the Associated Press. The measure is designed to loosen state control over oil production and sales in a bid to attract investment for an industry that has long struggled.
Rodríguez signed the legislation after Venezuela’s National Assembly approved it, doing so in a matter of hours, AP reported. In parallel, AP said the U.S. Department of the Treasury began easing punishing sanctions on Venezuelan oil while also expanding the ability of U.S. energy companies to operate in the South American country. AP reported that the largest known crude reserves in the world sit in Venezuela, underscoring why both Caracas and Washington see crude as a strategic lever.
AP reported that Rodríguez signed the bill against the backdrop of political upheaval in Venezuela earlier in the month, when then-President Nicolás Maduro was seized in what AP described as a U.S. military attack in Caracas. As Rodríguez signed the overhaul, AP said oil workers and ruling-party supporters gathered inside the legislative palace to celebrate the assembly’s approval, and later joined lawmakers in a demonstration.
The reform also became part of a broader U.S.-Venezuela diplomatic thread, AP reported. AP said Rodríguez spoke with U.S. President Donald Trump and Secretary of State Marco Rubio, who had earlier laid out to U.S. senators in a hearing how the administration planned to handle the sale of “tens of millions of barrels of oil from Venezuela” and oversee where the money flows.
In a direct quote carried by AP, Rodríguez framed the change as a generational shift, saying, “We’re talking about the future. We are talking about the country that we are going to give to our children.” AP reported that the reform was proposed earlier in the month after Trump said his administration would take control of Venezuela’s oil exports and seek to revitalize the ailing industry by drawing in foreign investment.
Under the law, AP reported, private companies would assume control over production and sales—ending Petróleos de Venezuela SA’s monopoly over those activities and pricing. AP said the legislation requires a private firm to demonstrate its “financial and technical capacity through a business plan approved by” Venezuela’s Oil Ministry before it can take over operations, while keeping ownership of the hydrocarbon reservoirs with the state.
AP also said the law changes how disputes are handled. It allows for independent arbitration of disputes and removes a mandate that disagreements be settled only in Venezuelan courts, AP reported, describing foreign investors’ view that independent arbitrators are crucial to protect against future expropriation. The law also modifies the tax structure AP said sets a 30% royalty cap rate and lets the executive branch set extraction percentages for each project based on capital investment needs, competitiveness, and other factors.
Rodríguez’s reform is being sold to investors as a set of legal and fiscal assurances after years of uncertainty, AP reported. Ruling-party lawmaker Orlando Camacho, who heads the assembly’s oil committee, said the reform “will change the country’s economy.” Opposition lawmaker Antonio Ecarri urged the assembly to add transparency and accountability provisions, including a website that would publish funding and other information, AP said.
AP reported that Ecarri linked those proposed changes to tackling corruption driven by the current lack of oversight and argued that the provisions could also function as judicial guarantees. “Let the light shine on in the oil industry,” Ecarri said, in a quote AP attributed to him.
The oil overhaul marks a reversal of state control that Venezuela’s ruling movement had promoted since Hugo Chávez’s era, AP said. The law had been altered roughly two decades ago under Chávez, with requirements that PDVSA be the principal stakeholder in major projects, and Chávez-era changes expanded social services financed by oil revenues estimated by AP at about $981 billion between 1999 and 2011 as crude prices rose.
AP said Chávez nationalized major assets belonging to foreign firms that did not comply with the new rules, including ExxonMobil and ConocoPhillips, and that those companies are still seeking billions of dollars in arbitration awards. As oil prices fell, along with corruption and mismanagement, AP reported that PDVSA’s fortunes—and Venezuela’s broader economy—declined sharply, driving a migration of more than 7.7 million people by 2013. AP said successive U.S. sanctions further crippled the oil industry, as Venezuela now seeks to recalibrate its oil rules through the new law signed by Rodríguez.