Venezuela’s government, led by acting President Delcy Rodriguez, has advanced reforms to open its state-controlled oil sector to foreign and private investors.
Venezuela’s National Assembly backed legislation on Thursday that would reduce state dominance and grant oil companies greater control to operate fields and market output independently.
To make these ventures more attractive, the plan would cut taxes and offer flexibility on the 30% royalty rate and introduce international mediation to address past expropriation disputes.
Rodriguez framed the move as essential to revitalizing an industry left in ruins by years of mismanagement and sanctions.
“The operating company shall assume the comprehensive management of the execution of the activities, at its sole cost, expense and risk,” said the draft seen by the Associated Press. It also says that portions of production volumes “may be directly commercialized by the operating company, once governmental obligations have been fulfilled.”
Under the socialist policies of Hugo Chavez and former Venezuelan dictator Nicolas Maduro, output fell from historic highs to under 1 million barrels per day by 2025. Mismanagement contributed to poor operation levels. As a result, executives have said it would take years to rebuild production.
Lawmakers read the bill on Thursday, and it passed on an initial vote. It is expected to move swiftly through its second and final votes.
The reforms come amid a tumultuous month in Venezuelan-U.S. relations, driven by President Donald Trump’s order to capture Maduro and bring him to the United States to face criminal charges.
Trump has repeatedly cast access to Venezuela’s oil riches as a strategic priority for the U.S., even meeting with oil executives to discuss opportunities.
Under an agreement reached with Washington, Venezuela is also expected to export 30-50 million barrels of oil to U.S. markets, part of efforts to redirect crude flows previously bound for China or other buyers under discount arrangements.
U.S. oversight of Venezuela’s oil sector has broad geopolitical implications, including possible conflicts with China over debt owed under past oil-for-loan accords and disputes over credit priorities.
Jorge Rodriguez, the President of the National Assembly, said the bill is necessary to increase oil production and that “oil under the ground is useless.”
US LEAVES WORLD HEALTH ORGANIZATION
While the legislation is a step in the right direction, it does not mean investors will jump right into the country’s oil industry.
Some investors may still be wary of the government’s compensation, as firms such as Exxon have been burned before and lost billions in revenue.