Venezuela has taken a major step to attract foreign investment by passing a landmark reform of its oil industry. Signed into law by acting President Delcy Rodríguez, the legislation eases decades of state control, allowing private and international companies to operate oil projects while the state retains ownership of reserves. The move aims to revive the country’s declining oil production and draw back investors who had long been hesitant to enter the market.
Under the new rules, companies can manage production and sales at their own risk, while independent arbitration is now permitted for disputes, reducing legal uncertainties that previously discouraged foreign operators. The law also grants greater operational freedom, letting companies make key decisions on investment and day-to-day management — a sharp reversal of policies introduced during Hugo Chávez’s nationalisation drive in 2007.
Financial incentives have been added to improve competitiveness. Royalties are capped at 30%, with regulators able to adjust rates for individual projects. This flexibility is expected to attract technologically advanced operators and large-scale investors to help modernize Venezuela’s energy sector.
The reform coincides with partial easing of U.S. sanctions on Venezuelan oil. A newly issued general license allows certain U.S. firms to engage in trade and transport of Venezuelan crude, signaling international support for the country’s efforts to reopen its oil market. Analysts say the combination of domestic reform and sanction relief could restore investor confidence and potentially boost production in the coming years.
Venezuela holds the world’s largest proven oil reserves, but output has fallen sharply due to years of mismanagement, underinvestment, and sanctions. Industry experts say the law could stimulate production, generate revenue, and create jobs, although political instability and past economic challenges remain key risks.
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