The reform will undoubtedly be her government’s signature policy as it positions the oil sector – Venezuela’s engine – to lure the foreign investment needed to revamp a long-crippled industry. Rodríguez enacted the measure less than a month after the capture of then-President Nicolas Maduro in a U.S. military attack in Venezuela’s capital, Caracas.
Rodríguez, facing oil workers and ruling-party supporters, signed the bill less than two hours after the National Assembly approved it. At the same time, the U.S. Department of Treasury officially began to ease punishing economic sanctions on Venezuelan oil, which were imposed by the first Trump administration, and expanded the ability of U.S. energy companies to operate in the South American nation.
Rodríguez on Thursday also spoke with U.S. President Trump and Secretary of State Marco Rubio, who a day earlier explained to U.S. senators in a hearing how the administration is planning to handle the sale of tens of millions of barrels of oil from Venezuela and oversee where the money flows. Venezuela has the largest proven reserves of crude in the world.
The moves by both governments are paving the way for yet another radical geopolitical and economic shift in Venezuela.
“We’re talking about the future. We are talking about the country that we are going to give to our children,” Rodríguez said of the reform.
Rodríguez proposed the changes earlier this month, after Trump said his administration would take control of Venezuela’s oil exports and revitalize the ailing industry by luring foreign investment.
Private companies to control oil production
The legislation promises to give private companies control over the production and sale of oil, ending the state-owned Petróleos de Venezuela SA’s monopoly over those activities as well as pricing.
A private company “will assume full management of the activities at its own expense, account, and risk, after demonstrating its financial and technical capacity through a business plan approved by” the nation’s Oil Ministry, according to the law. The legislation provides that ownership of the hydrocarbon reservoirs on which a company will carry out activities remains vested in the state.
The new law also allows for independent arbitration of disputes, removing a mandate for disagreements to be settled only in Venezuelan courts, which are controlled by the ruling party. Foreign investors view the involvement of independent arbitrators as crucial to guard against future expropriation.
Rodríguez’s government expects the changes to serve as assurances for major U.S. oil companies that have so far hesitated about returning to the volatile country. Some of those companies lost investments when the ruling party enacted the existing law two decades ago to favor Venezuela’s state-run oil company, PDVSA.
Additionally, the revised law modifies extraction taxes, setting a royalty cap rate of 30% and allowing the executive branch to set percentages for every project based on capital investment needs, competitiveness and other factors.
