Its interim president, , on Thursday signed a law opening the country to , overturning one of the main pillars of the socialist model that has dominated the country for more than two decades.
The reform is expected to be the “flagship” of her government as it repositions the oil sector – the engine of the Venezuelan economy – to attract foreign investment and revive an industry that has been in deep crisis for years.
The signing of the law came less than a month after President Nicolas Maduro was spectacularly arrested by the US during a military operation in the capital Caracas.
Simultaneous relaxation of American sanctions
Rodriguez signed the law less than two hours after it was approved by the National Assembly, in the presence of oil sector workers and supporters of the ruling party.
REUTERS/Maxwell Briceno
At the same time, the U.S. Treasury Department formally began easing tough sanctions on Venezuela’s oil — sanctions imposed during Trump’s first presidency — while expanding the ability of U.S. energy companies to do business in the country.
Rodriguez also spoke by phone with US President Donald Trump and the secretary of state, who a day earlier had explained to the Senate how Washington plans to manage the sale of tens of millions of barrels of oil from Venezuela and control of the proceeds. The country has the largest proven reserves of crude oil in the world.
The moves of both governments pave the way for yet another radical geopolitical and economic change in Venezuela.
“We are talking about the future of our children”
“We are talking about the future. We are talking about the country that we will hand over to our children,” Rodríguez said, referring to the reform.
She proposed the changes earlier this month after Trump said the US would take control of Venezuela’s oil exports, seeking to rebuild the sector through foreign investment.
End the monopoly of the state-owned PDVSA
The new law provides that private companies will be able to take full control of oil production and sales, ending the monopoly of state-owned Petróleos de Venezuela (PDVSA), both in exploitation and pricing.
According to the text of the law, private companies will undertake “the overall management of the activities, at their own expense, responsibility and risk”, after proving their financial and technical competence, through a business plan, approved by the Ministry of Petroleum.
At the same time, it ensures that ownership of hydrocarbons remains with the state, while introducing the possibility of international arbitration to resolve disputes – a crucial element for foreign investors, who fear future expropriations.
Tax changes and growth expectations
The law also amends the mining tax regime, capping royalties at 30% and allowing the executive to adjust rates on a project-by-project basis, based on investment needs and competitiveness.
Ruling party lawmaker and head of the National Assembly’s oil committee, Orlando Camacho, said the reform “will change the country’s economy.”
On the opposition side, MP Antonio Ecarri called for greater transparency and accountability, proposing the creation of a public platform to post financial data. “Let light shine on the oil industry,” he said characteristically.
From Chávez to privatization
The law was last amended two decades ago, when Hugo Chavez – Maduro’s mentor and predecessor – made state control of oil a cornerstone of his socialist revolution.
Between 1999 and 2011, oil revenues reached $981 billion, funding extensive social programs. But falling prices, corruption and mismanagement have led to the gradual collapse of PDVSA and an economic crisis that, since 2013, has pushed more than 7.7 million Venezuelans to emigrate, with US sanctions becoming the “tombstone” of an already weakened oil sector.
