Venezuela has approved sweeping reforms that dramatically reduce state control over its oil sector, a development viewed as a response to pressure from the United States following the capture of former President Nicolás Maduro. The National Assembly unanimously approved the changes on Thursday, allowing private companies to directly manage oilfields and sell crude oil at their own expense and risk.
Acting President Delcy Rodríguez signed the legislation into law after celebrating its passage with supporters and state oil workers at Miraflores Palace in Caracas. She described the reform as transformative, saying it would convert the country’s vast petroleum reserves into prosperity for ordinary Venezuelans. The reform marks a dramatic reversal of policies established two decades ago under the late Hugo Chávez, who made heavy state control over energy resources central to his political movement.
Under the new law, foreign companies can assume full operational and financial control of oil projects after demonstrating technical capacity and receiving approval from the Oil Ministry. Private firms will no longer be required to partner with Petróleos de Venezuela (PDVSA), the state oil company that has dominated the sector since 2001. The legislation also permits independent international arbitration of commercial disputes, replacing a mandate that required all disagreements to be settled in Venezuelan courts controlled by the ruling party.
Venezuela holds the largest proven oil reserves globally, estimated at roughly 300 billion barrels. National Assembly President Jorge Rodríguez, the acting president’s brother, said the reform would make hiring domestic and foreign companies more competitive. Orlando Camacho, a ruling party lawmaker who chairs the assembly’s oil committee, predicted the changes would fundamentally reshape the country’s economy.
The legislation sets a maximum royalty rate of 30 percent on extraction activities, though the executive branch retains authority to adjust percentages for individual projects based on investment needs and competitiveness factors. Opposition lawmaker Antonio Ecarri urged the government to include transparency provisions, including a public website disclosing funding information. He argued that Venezuela’s chronic lack of oversight has enabled systemic corruption and that greater accountability would serve as an additional guarantee for investors.
President Donald Trump said his administration would take control of Venezuelan oil exports and revitalize the industry through foreign investment shortly after US forces captured Maduro on 3 January. The Trump administration has made clear its desire to see American companies invest heavily in Venezuelan energy assets. Energy Secretary Chris Wright announced a $500 billion energy cooperation agreement between Washington and Caracas following Maduro’s removal.
However, some oil executives remain skeptical about investing in Venezuela. The chief executive of Exxon Mobil described the country as uninvestable during a White House meeting after Maduro’s capture. Sources told CNN that the Trump administration is considering deploying private military contractors to protect oil infrastructure, though this has drawn concern from some industry leaders.
The US Treasury Department issued a general license on Thursday authorizing American companies to conduct certain activities with the Venezuelan government related to oil exports, purchases, sales, storage and transportation. This represents the latest easing of sanctions since the acting government signaled willingness to cooperate with Washington. The Trump administration previously suspended flights to Venezuela in 2019, citing threats to passenger and crew safety.
Trump announced during a cabinet meeting on Thursday that the US would reopen commercial airspace over Venezuela. He said American citizens would soon be able to travel safely to the country, which he described as being under very strong control. The president directed Transportation Secretary Sean Duffy and military leaders to lift airspace restrictions by day’s end. The Federal Aviation Administration (FAA) subsequently cancelled four notices that had warned pilots to exercise caution when flying near Venezuela.
Jorge Rodríguez attributed the airspace decision to his sister’s diplomatic efforts, calling it a positive outcome of peace driven diplomacy by the presidency. American Airlines announced plans to resume flights to Venezuela soon, noting the carrier’s 30 year history of connecting Venezuelans to the United States. Before economic collapse in the mid 2010s, Venezuelans regularly took weekend leisure trips to Miami.
The State Department maintained its highest level travel advisory for Venezuela on Thursday, warning Americans of risks including wrongful detention, torture and kidnapping. Officials did not immediately respond to questions about whether that warning would change. The department told congressional committees this week that it plans to implement a phased approach to potentially resume operations at the US Embassy in Caracas. Diplomatic relations between the countries collapsed in 2019.
Chávez’s government enacted the existing oil law in 2001 and strengthened it further in 2006, requiring PDVSA to hold majority stakes in all major projects. The policy led several American and Western companies to abandon their investments when Chávez nationalized their assets. Exxon Mobil and ConocoPhillips are still waiting to receive billions of dollars in arbitration awards from those expropriations.
Record high global oil prices during Chávez’s early tenure turned PDVSA into the backbone of Venezuela’s economy, generating an estimated $981 billion in revenue between 1999 and 2011. Those funds financed extensive social programs including housing and education initiatives. Production and profits later collapsed under government mismanagement and falling crude prices, first during Chávez’s final years and then under Maduro.
Economic crisis drove more than 7 million Venezuelans to flee the country since 2014. Rodríguez told the National Assembly earlier this month that temporary production sharing contracts introduced in April 2024 helped increase output from 900,000 barrels per day to 1.2 million, with investments under that model reaching nearly $900 million in 2025. Critics have called the reform unconstitutional, though former Venezuelan officials and analysts are divided about whether the changes go far enough to attract significant capital.
Some energy experts expressed cautious optimism about the law’s potential to invite new investment while noting limitations. Oswaldo Felizzola, coordinator of Venezuela’s International Centre for Energy and Environment, told Al Jazeera that the reform contains necessary elements but remains insufficient for 21st century needs. He described it as less statist than previous policy but still significantly constrained.
The legislation received approval in less than two weeks after its introduction, unusually fast passage for such fundamental changes to the hydrocarbon sector. The assembly’s energy committee received approximately 120 proposals to modify the law. The opposition criticized the rushed process, arguing that legislation governing the world’s largest oil reserves should emerge from broad consultation among all stakeholders rather than hasty debate.
Oil workers wearing red jumpsuits and hard hats celebrated inside the legislative palace, waving Venezuelan flags alongside ruling party supporters. Trump has said the US will control Venezuelan oil revenue indefinitely following a reported $2 billion supply deal between the countries. Many potential investors consider the reform adequate to encourage initial capital deployment for recovering the country’s depleted industry, though questions remain about legal stability given Venezuela’s history of abrupt policy reversals.
The reform represents the acting government’s signature policy initiative as it positions the energy sector to attract investment needed to rebuild long crippled infrastructure. Whether the changes prove sufficient to overcome decades of corruption, mismanagement and political volatility remains uncertain. Washington has not recognized the legitimacy of Venezuela’s National Assembly elections or other voting processes, citing minimal participation and lack of international observation.
