Venezuela’s 2026 Oil Law Reform and What It Means for Investors

July 14, 2026

Introduction: The 2026 Oil Reform

In January 2026, Venezuela changed the rules for its oil industry. After the capture of Nicolás Maduro and the appointment of Delcy Rodríguez as interim president, the National Assembly approved a reform of the Organic Hydrocarbons Law, published in Gaceta Oficial Extraordinaria No. 6.978 (Ley de Reforma de la Ley Orgánica de Hidrocarburos, 29 Jan. 2026)^[1]. In political speeches, the measure has been promoted as a way to steady the economy by reopening the country’s vast reserves to foreign capital.

New Space for Private and Foreign Operators

The reform modifies the role of private entities in the Venezuelan oil sector, shifting from a service-provider model to one of empowered operational partners.

●                 From Service Providers to Operational Partners: While joint ventures (Empresas Mixtas) with PdVSA, Venezuela’s state-owned oil and gas company, remain the baseline structure, the reform introduces a new vehicle: the “Operating Agreement” (Contratos de Operación). Under this model, private companies established in Venezuela can take on primary activities, including exploration and extraction, under contracts with PdVSA or its subsidiaries that put most of the cost, risk, and day‑to‑day control onto the private side. Venezuela keeps ownership of hydrocarbon reserves, retains broad approval powers, and preserves contractual reversion rights over project infrastructure at the end of the term. (Organic Hydrocarbons Law arts. 23, 40–44).

●                 Commercial and Operational Autonomy: The reform loosens the state monopoly on exports by allowing private and foreign partners to assume operational control and commercialize their share of production, provided sales meet or exceed stated price benchmarks. Additionally, the reform expands rights for minority shareholders, authorizing them to open and manage bank accounts, in any currency and jurisdiction, for the administration of project revenues and costs, ensuring that project cash flows remain segregated from state accounts. (Organic Hydrocarbons Law art. 36).

●                 Fiscal Incentives: Although the statutory royalty cap remains at 30%, the reform gives the Executive new authority to reduce rates if projects are proven to be not viable economically at the standard rate, a flexibility designed to encourage new investment and support growth. In addition to the new royalty regime, a new "Integrated Hydrocarbon Tax" consolidates various prior sector‑specific contributions previously imposed on hydrocarbon operators, including foreign participants, and is capped at 15% of gross revenues. (Organic Hydrocarbons Law arts. 51, 55–57).^[2]

●                 Dispute Resolution: The reform introduces a new provision explicitly facilitating the submission of disputes to mediation or arbitration, relaxing the prior exclusivity of Venezuelan courts, by allowing hydrocarbon contracts to include mediation and arbitration clauses that follow guidelines issued by the Hydrocarbon Ministry and, if they do so, are exempt from the prior authorization otherwise required from the Venezuelan Office of the Attorney General. (Organic Hydrocarbons Law art. 8).

How U.S. Sanctions Affect the Reform

At the same time, there have also been developments in U.S. sanctions policy. The U.S. Office of Foreign Assets Control (OFAC) has issued a series of Venezuela‑related general licenses —most recently GL 46,B 47, 48A, 49A and 50A—removing certain sanctions and authorizing certain transactions involving Venezuelan oil and petrochemical products.

On January 29, 2026, as amended on March 13, 2026, OFAC granted a general license to established U.S. entities to enter into previously prohibited transactions incident and necessary to the lifting, exportation, re-exportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan origin oil, including the refining of oil, or of Venezuelan-origin petrochemical products for importation into the United States.^[3] Both the original and amended general licenses have strict compliance requirements barring transactions involving Russian, Iranian, North Korean or Cuban persons, as well as any Venezuelan or U.S. entity that is owned, controlled by, or operates in a joint venture with Chinese interests, and channels monetary payments through designated foreign‑government deposit accounts.

On February 3, 2026, GL 47 authorized sales of U.S.‑origin diluents to Venezuela. GL 48A permits U.S. persons to enter into transactions for the provision of goods, technology, software, or services for the exploration, development, or production of oil or gas in Venezuela. GL 49 allows U.S. persons to negotiate and enter into “contingent contracts” for new investments that only become effective if OFAC later issues specific licenses. OFAC FAQ 1244 clarified on March 4, 2026, that licenses under GL 49 would be granted on a case-by-case basis based on U.S. foreign policy and national security grounds. GL 50A enables a limited group of named oil companies to carry out a broad range of operational activities, subject to detailed payment‑control and reporting obligations. Companies relying on these licenses must report counterparties, volumes, values, and dates to OFAC on a rolling basis and conduct enhanced sanctions due diligence on ownership and control structures for all participants.

Early Observations and Open Questions

While the reform is an important legal shift in the Venezuelan market from a total state monopoly of the hydrocarbon sector, it is not a complete reset of the institutional landscape. The Ministry of Petroleum still has authority over the approval and modification of hydrocarbon contracts, authorization of asset transfers and approval of outsourcing and third-party operators. Accordingly, how these powers are exercised will matter as much as the statutory language. For investors, the immediate concerns are familiar: discretion at the ministerial level; regulatory uncertainty amidst political instability; a recent history of asset nationalization without adequate compensation; and the extra layer of U.S. sanctions compliance that sits on top of Venezuelan domestic law. These factors all exacerbate the risks associated with the extensive capital injections required to revitalize the country’s deteriorated hydrocarbon infrastructure.

For the future, investors and advisors should monitor a few crucial indicators: the publication of detailed implementing regulations, the release of standardized contract templates and the outcome of early projects, which will indicate how consistently the new framework is applied in practice.

Why Major International Oil Companies (IOCs) Are Still Hesitant

So far, the reform has not triggered a rush back into the country by major oil companies. Their legal and compliance teams are waiting to see the implementation of regulations and model contracts in final form; and they are understandably wary of Venezuela’s debt overhang, ongoing creditor disputes, and the cost of rebuilding the sector.

Put simply, the legal and financial hurdles make large, long‑term commitments hard to justify for now. Unless there are clearer assurances on contract stability, a more predictable U.S. sanctions framework (including the future of General Licenses cited above), and creditor exposure, significant new IOC investment is unlikely.

Authors:

Felipe Rettore Starling Pereira

Marcia A. Wiss

Fádia Tuma Antunes

Footnotes:

^[1]Ley de Reforma de la Ley Orgánica de Hidrocarburos, Gaceta Oficial de la República Bolivariana de Venezuela [G.O.] No. 6.978 Extraordinario, Jan. 29, 2026 (Venez.), http://www.gacetaoficial.gob.ve/storage/2026/6978-2026-01-29-EXTRAORDINARIA.pdf.

^[2] Venezuela: Amended Hydrocarbons Law Introduces New Tax Framework, KPMG TaxNewsFlash (Feb. 3, 2026), https://kpmg.com/us/en/taxnewsflash/news/2026/02/venezuela-amended-hydrocarbons-law-tax-framework.html.

^[3] Recent Actions, Off. of Foreign Assets Control, U.S. Dep't of the Treasury, https://ofac.treasury.gov/recent-actions/general-licenses (last visited July 8, 2026)