Venezuela’s National Assembly has approved a reform of the country’s long-running nationalist oil policy, and acting President Delcy Rodríguez later signed the new oil reform law. The changes are designed to attract private capital by easing tax and royalty rules and giving officials more flexibility over fiscal terms in oil projects.
The legislation passed unanimously in a second and final round of voting in the government National Assembly, according to the report. After the vote, Rodríguez signed the law in front of dozens of oil industry workers and called the approval a “truly historic, qualitative leap.”
What the new oil reform changes
The reform updates a policy framework associated with late former president Hugo Chavez and shifts key rules to reduce burdens on private businesses. It includes 34 new articles that ease taxes for private businesses while allowing them to sell oil and resolve disputes in international courts.
One central change replaces Venezuela’s extraction tax with a new “integral” hydrocarbons tax of up to 15% applied to gross production, with no deductions, according to the version of the bill described in the report. The reform also caps royalty rates at 30% but no longer fixes them in law, giving the Oil Ministry room to adjust levies depending on a project’s phase, capital intensity, and overall economics.
The report says the Oil Ministry would also be able to reduce the country’s hydrocarbons income tax rate to preserve returns, though some legal experts have questioned whether that provision conflicts with constitutional limits on tax authority. The Oil Ministry did not respond to earlier questions on the bill’s details, according to the same account.
Arbitration and investor concerns
The report describes changes aimed at easing legal constraints that had unsettled investors in earlier drafts. It says revised language removes a limitation that would have restricted dispute resolution to “independent” arbitration, widening the range of arbitration mechanisms that could be used outside Venezuela.
A first draft of the legislation was approved on Jan. 22, according to the report. The final passage comes as officials seek to make the sector more attractive to outside capital, but the plan has also prompted criticism from different parts of the political spectrum, the report says.
The report states that, under pressure from Washington, Rodríguez has sought to open the energy industry to more foreign oil companies. It also says some of Rodríguez’s allies view the move as a break from nationalist ideals, while some international lawyers argue the reform does not provide adequate safeguards for investors.
US license expands permitted activity
Rodríguez’s remarks came after the Trump administration issued a general license that expands the ability of oil companies to operate in Venezuela, according to the report. The license covers activities that could speed up Venezuelan crude flows, including exporting, selling, storing, and refining the country’s oil, the report says.
At the same time, the report says US oil sanctions on Venezuela remain in place. It adds that among companies with a US nexus, Chevron Corp. is currently the only firm with a US Treasury Department license to produce oil in Venezuela, while other firms are waiting for authorization to restart or explore upstream operations.
Political messaging around the reform
During the National Assembly discussion, lawmaker Antonio Ecarri said the country had entered “international competitiveness” and described the change as a starting point, according to the report. He also expressed hope that other parts of the economy would benefit from similar criteria, the report says.
In signing the law, Rodríguez framed the reform as a step toward turning oil reserves into “happiness for Venezuelans,” according to the report’s description of her remarks. The unanimous vote and swift signing signal a major policy shift in how Venezuela plans to structure investment terms in its oil industry.
