Finance Desk

Many have commented on the recent reforms to the Venezuelan Hydrocarbons regime and its reach. Most people have focused on the irony of Delcy Rodríguez giving away the country’s resources after years of empty anti-US rhetoric and, of course, it is ridiculously tempting to do so. But the long-term questions beyond the political posturing of the US robbing Venezuelan oil linger: is the reform good for Venezuela? Was the previous regime really favorable to the country’s interest? Why has the reaction by major oil companies been rather slow or lukewarm, as the WSJ reported a month ago?

The debate over the adequacy of Venezuelan oil regulations predates January 3. A statist vision has prevailed among political elites for almost half a century. Contrary to the chavista narrative, the oil industry in Venezuela was nationalized by Carlos Andrés Pérez fifty years ago. Up until the 1990s, the State, through PDVSA, performed exclusively primary oil activities: exploration and production. Then, due to the sharp drop in oil prices, the cash-strapped Rafael Caldera government, using a provision of the 1975 nationalization law, had to allow for private investment in primary activities through service agreements with foreign oil companies. These contracts were branded as the Apertura Petrolera, which became a bête noire for the Venezuelan Left, who even tried to stop the process via the Supreme Court.

Chávez put an end to this with his 2001 Hydrocarbons Law reform, migrating from the service agreements to joint venture companies where the Venezuelan state was the main shareholder. The refusal of some companies, like Conoco and Exxon, to migrate to the joint ventures led to several of the arbitration claims against Venezuela. Another contentious aspect of the Venezuelan oil business was that only State-owned companies could directly export oil. Joint venture companies could only sell oil to another PDVSA subsidiary, which led to PDVSA running up huge debts with foreign partners.

The Chávez 2001 model ruled until recently. Only PDVSA directly, or the JVs where PDVSA was a majority shareholder, could perform exploration and production activities and export oil.

The Executive also retained very discretionary power over what is called the government take (the percentage of oil or profits taken as a consideration in agreements with foreign partners in the joint ventures and applicable taxes), which can be used by the government to drive down the profits of its private company partners, a major deterrent for private investment in oil.

Up until very recently, the Chávez 2001 model was ruling: only PDVSA directly, or the joint ventures where PDVSA was a majority shareholder, could perform exploration and production activities and sell oil in international markets.

A similar regime was implemented in Colombia. In 2003, that country reformed its hydrocarbon regime to its current iteration, where it removed the exclusive primary activities rights granted to Ecopetrol, and established that this State-owned company would compete with private companies for exploration through contracts granted by a newly minted hydrocarbons regulator, the ANH. The ANH grants exploration rights under competitive bids where Ecopetrol competes with private companies under the same conditions. The purpose was to simplify the existing bureaucracy and award contracts under competitive, transparent bids, instead of having an all-mighty State company that both drills and decides who drills under very discretionary powers, as is the current case with PDVSA.

This model was behind past reform proposals by the opposition and have been part of the expert discussion on oil reform in Venezuela, and it is also included in María Corina Machado’s oil sector proposal, which received hypocritical criticism from people who remained mum about Delcy’s sweeping reforms. This model is seen as a true break from the previous one, as it takes power away from omnipotent PDVSA and turns it into just another player who has to compete with private companies in competitive bidding before a national, impartial regulator.

The reforms do represent a momentous formal break with the statist oil policy that has prevailed in the country for over 50 years. Under the new Hydrocarbons Law, private companies can perform primary activities through contracts with PDVSA subsidiaries and joint venture companies, and can export oil directly to international markets, paying the government take. The law, enacted on January 29, 2026,  also establishes that these contracts can include arbitration clauses, which can provide more certainty and guarantees for potential investors than submitting them to Venezuela’s infamously corrupt and dependent courts. The law also worryingly removes parliamentary oversight over the oil sector.

But the catch is that abiding by the law has never been chavismo’s strong suit, and they had been violating the Hydrocarbons Law since 2018. Under the aegis of the disgraced oil czar/soccer player Tarek el Aissami, PDVSA started signing contracts granting primary activities rights to private companies, as well as the right to directly export oil. This was done on dubious legal grounds under presidential emergency powers. Thus, the 2026 Hydrocarbons Law is only a regularization of a de facto situation that already existed.

The new regulations give a lot of discretionary power to the government to control the performance of the new contracts and to set the government’s take unilaterally.

As with everything in life, the devil is in the details, and the new law is very scant on the details of the new contracts, it seems to have been drafted in a rush. It defines very broadly the terms and conditions of the contracts (the new contracts pertaining to joint venture companies are only mentioned in passing) while at the same time giving the government wide discretionary powers to interpret them, and the last thing any international investor wants is to give chavismo discretionary powers over anything.

Delcy Rodríguez also enacted new regulations of the Hydrocarbons Law (which have not been updated since 1943) and two additional resolutions establishing some parameters for the government take. A centralized regulation of the government take is a welcome change, but the reaction to it has been mixed, as it gives a lot of discretionary power to the government to control the performance of the new contracts and to set the government’s take unilaterally.

The law also fails to incorporate any change to the current structure of the Venezuelan oil architecture. Unlike the reform in Colombia, the new law does not remove the elephantine, vastly discretionary bureaucracy that chavismo created.  PDVSA remains the almighty administrator of Venezuelan oil with no independent technical supervision of its role.

So, are the reforms good? They do signify a break from the statist vision of the oil industry, one that does not correspond with the wretched state of the Venezuelan oil sector. However, it is obviously a patched-up, limited instrument enacted by Delcy’s multiuse minions more to appease Donald Trump (even the reaction from American oil companies has been lukewarm) than anything resembling a definitive vision for the Venezuelan oil industry in an era of decarbonization.

The most likely outcome, already playing out according to the WSJ piece, is that the major oil companies (already traumatized by the previous experiences with chavismo expropriation frenzy over 20 years ago) remain skeptical or limit its investment due to the lack of clear guarantees and conditions and smaller, less known and less risk-averse companies are the ones who end up signing these contracts for a short-term gain. Chevron, who is now the most powerful player in the Venezuelan oil business, publicly signaled that the law doesn’t go far enough for them, and, considering their leverage with the Trump administration, it is possible that the Rodríguez regime is forced to further liberalize and refine the text of the law. But under the current conditions of legal uncertainty and arbitrariness no company, whether big or small, will risk investing the vast amount of money needed  (about 183 billion dollars) to recover the Venezuelan oil industry after decades of destruction and pillage. Oil companies may be evil, but never stupid. 

All of these scenarios have a limited effect on the recovery of the Venezuelan oil industry without a democratic transition because for any law to have a meaningful impact on the economy you need actual rule of law and independent courts, and you also need actual experts drafting the new laws. Not the very few lackeys of the most incompetent government in our history who happen to be proficient in English.

As a wave of cheap Chinese imports has flooded the EU in recent years, Brussels is now facing a new challenge: new import routes passing through Morocco and Turkey, the EU’s neighbouring countries, where Beijing can leverage tariff-free trade agreements with the bloc.

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By investing heavily in those countries, China is seeking to circumvent the EU’s trade barriers, including the extra duties imposed by the EU on products such as electric vehicles, and channel its industrial overcapacity into the European market.

European policymakers are now bracing for a surge in low-cost Chinese goods entering duty-free through these gateway countries, thanks to an association agreement that liberalises trade with Morocco and a customs union linking Turkey to the EU.

The European Commission launched negotiations with Beijing in June in a bid to rebalance a trade relationship that has left the EU with a €1 billion deficit. However, it is not guaranteed to reach concrete results by October — the deadline set by Trade Commissioner Maroš Šefčovič.

Brussels has already made clear it is prepared to deploy new unilateral trade defence measures. But Beijing is becoming increasingly adept at getting around the EU’s traditional trade tools, particularly trade defence tariffs.

Its circumvention strategy is now to go through Morocco and Turkey, which are becoming the new front line in the EU’s trade battle with China.

Billions in investments

Over the last four years, these investments have reached a record $6 billion in Morocco and $2 billion in Turkey, according to Rhodium Group, an independent research provider.

Cairo is also attracting Chinese money, with $6 billion invested in 2025 alone. But Chinese products made in Egypt are mainly exported to the US and Gulf countries.

In Morocco, Beijing has been investing in an entire electric vehicles (EV) manufacturing ecosystem. “There is a genuine long-term trend that began after COVID-19. We are seeing Chinese companies setting up operations in the country to manufacture high-value-added goods,” Armand Meyer, an expert at Rhodium Group, told Euronews.

Chinese battery producer Gotion is settling in the country, along with BTR, Tinci and Huayou, which produce battery materials, APG, an automotive brake manufacturer, and Sentury Tire, a tyre maker. All will soon have factories in Morocco.

The EU, which hit Chinese EVs with anti-subsidy duties in 2024, is concerned about China’s move into neighbouring countries.

In Turkey, part of the investment targets the local market, while Chinese export plans also threaten European producers. China’s EV giant BYD was granted preferential access to the Turkish market to build a factory, although the project has been suspended for now.

“The idea was to build a mega-factory in exchange for an exemption from Turkish import duties, as Turkey imposes tariffs on Chinese electric vehicles,” Meyer said. Chinese home appliance maker Haier is also investing in the country, as is Astronergy, which manufactures solar panels.

China’s manufacturing push in those countries spans multiple sectors, exploiting trade agreements with the EU that cover a wide range of products.

“The free trade agreements with Morocco and Turkey cover almost all goods. So it’s complicated to counter the Chinese export strategy,” Thomas Grjebine, an economist at the French Centre for Research and Expertise on the World Economy, told Euronews.

Grjebine added that China has understood these countries can serve as “a staging ground”, with investments rising year after year.

“Investments in these gateway countries account for about a quarter of China’s total investment in Europe and the Maghreb,” he said.

Reducing Morocco and Turkey’s access to the EU market

However, in March, the Commission proposed a landmark bill called the Industrial Accelerator Act (IAA) which aims to protect the EU market from foreign competitors — provoking anger from China.

The IAA creates a European preference for access to public procurement and EU public funding schemes, ruling out non-EU countries under certain conditions. China was targeted in particular, leading to threats of retaliation from Beijing.

All foreign countries are now lobbying EU lawmakers, who are discussing the bill, to be considered trusted partners, allowing their products to qualify as “Made in Europe”.

Industries with parts of their value chains outside the EU are also urging MEPs to include those countries. Euronews has learnt that ACEA, for instance, which represents European carmakers in Brussels, has been lobbying EU lawmakers to include Morocco, where many European manufacturers have production plants.

Paradoxically, if Morocco and Turkey — where European carmakers are also established — were considered trusted partners whose products could be labelled “Made in Europe”, it would also serve Beijing’s interests — despite fierce competition with the EU in the automotive sector — as China is building factories there.

“The Chinese know full well that a number of companies have located part of their value chain in those countries and are lobbying hard to ensure that Morocco and Turkey are not excluded from what is considered ‘Made in Europe’,” French socialist MEP Pierre Jouvet told Euronews.

“This is part of Beijing’s investment and tariff circumvention strategy,” he said.

The MEP is campaigning to exclude Morocco and Turkey from the scope of the IAA unless both countries open their public procurement markets to EU companies.

That position is backed by French liberal MEP Christophe Grudler and German Green MEP Anna Cavazzini, who, along with Jouvet, are expected to present a report on the issue to fellow MEPs in September.

EU trade defence instruments lack effectiveness

Without such a bill, the EU’s trade defence instruments remain modest compared with the scale of the coming wave of cheap Chinese products manufactured in those neighbouring countries.

The EU can only tackle Chinese dumping — where a product is sold below its normal value — on a product-by-product basis, as well as tariff circumvention when parts of the goods come from China and have only been assembled in Morocco or Turkey. The Commission usually assesses the value added generated in those countries before deciding whether to sanction Chinese companies with duties.

“For years, it was mostly a matter of transhipment through these countries, with Chinese exporters simply changing the certificate of origin, but defending the EU market has now become far more challenging,” Laurent Ruessmann, partner at law firm RB Legal, told Euronews.

Ruessmann has represented European glass fibre producers — whose products are used as reinforcement materials — in their fight against cheap Chinese imports. Eventually, glass fibre from China and from Chinese companies located in Egypt was hit with EU anti-dumping and anti-subsidy duties in 2020.

But the Commission then had to open new cases involving glass fibre fabrics — used in wind turbine blades — imported from Morocco and Turkey. In 2022, it found that they were made using Chinese glass fibre already subject to EU anti-dumping duties imposed in 2020, a textbook case of tariff circumvention.

More recently, in 2025, the Commission also slapped countervailing duties on aluminium road wheels made in Morocco after concluding China had unfairly subsidised them.

According to the Organisation for Economic Co-operation and Development (OECD), Chinese companies receive up to eight times more subsidies than Western firms.

With recent investments in Morocco and Turkey, the EU executive is facing a new challenge: Chinese companies are setting up factories abroad, generating more added value in those countries than in China.

“In those cases, the Commission can no longer rely on anti-circumvention rules and has to launch a fresh investigation. The challenge is that it is much more difficult to prove dumping or unfair subsidies, making it far harder to impose duties high enough to protect the European market,” Victor Crochet of law firm Nishimura & Asahi told Euronews.

Looking at recent judgments by the Court of Justice of the European Union, however, the lawyer believes EU judges will progressively allow the Commission to be “more aggressive” towards Chinese operations located in the EU’s neighbouring countries.

“The Commission will have to come up with new instruments. It will try to push the boundaries of the concept of circumvention to keep pace with the times, even when the raw materials no longer come from China,” Crochet said.

Photo of the Guri Hydroelectric Plant posted by the US Embassy on August 3

In the last few days, a sight that had become unusual in Venezuela for years took place in multiple parts of the country: street protests over electricity. The blackouts are increasing in frequency and duration without any warning, along with several strong brownouts. This recent uptick has even reached the capital, which the chavista government usually tries to protect from the chronic power deficit, at the expense of the rest of the nation.

In Carabobo state, people in Valencia and its surrounding cities reported both prolonged cuts and swift interruptions, which have taken their toll on their daily routine. Local authorities say that the full recovery of the thermoelectric plant Termocarabobo (directly affected by the earthquakes just like Planta Centro, close to the epicenter of the first quake) will help alleviate the problem.

Next door, in Aragua state, things are not much better. People in Maracay report daily double cuts of four to five hours, hitting the city’s commercial sector despite the use of power plants. In the smaller towns of Villa de Cura and San Mateo, citizens held peaceful protests to complain as governor Joana Sánchez blamed current electricity woes on the June 24 earthquakes.

The increase in power outages has reached both the east and west of Venezuela. In the western Lara state, an unannounced blackout right after midnight on July 31 left large parts of the state in the dark, in addition to the lengthy daily rationing that reaches up to five hours. Local NGO Activos por la Luz, which monitors the effects of the electric crisis in the region, released in response a very scathing statement on social media:

Protests spanning affluent Lechería and impoverished El Callao spell bad news for Delcy Rodríguez’s promise of economic recovery. 

“This has stopped being just an electrical problem. This is a systematic destruction of our mental health, our emotional stability, of our dignity and of our hope as people. It’s not normal to live under constant stress, without knowing when the power goes out, how long the blackout will last or how you will go to sleep, work or just survive the heat and the burnout. We have been pushed to a permanent state of anxiety, frustration and impotence…”

Very bad mood in Oriente

Meanwhile in the eastern cities of Maturín and Anaco, people made their voices heard in front of the offices of State-owned electricity Corpoelec without incident. Sadly, that wasn’t the case in Guayana, as a public gathering in the road to enter the town of Guasipati on July 28^th was dissolved by a group of unidentified men using firearms. The following day, the nearby town of El Callao witnessed a civic strike protesting six-to-seven hour power cuts and the collapse of other public services caused by increasing mining activity in the area and the growing population influx.

Such is the level of exasperation that the mayor of Lechería, Manuel Ferreira, publicly called Corpoelec to establish a proper scheduling of the electrical cuts. “Without schedules, without timetables and without respect: that’s how our neighbors have been treated. We understand the climate variables or the structural system failures, but if the rationing is unavoidable, the least we demand is respect and dignity. People have the right to know when the service is taken off so they can prepare.”

To better understand the relevance of this: both Guasipati and El Callao belong to the region covered by the Mining Arc, where there is a documented presence of gangs (hence the recent killing of Tren de Aragua’s leader in nearby Kilometro 88), and the military is currently deploying intense control over the population. The gold industry in the region is vital for the regime’s interests and has recently fallen under the eye of the Trump administration and the international mining companies the White House aspires to attract to Venezuela. Lechería remains an enclave for the privileged, the ones who built or preserved a comfortable life during the worst years of the country’s economic decline. The fact that both regions are witnessing protests of this scale is more bad news for Delcy Rodríguez’s promise of economic recovery. 

The electric transition hasn’t started either

Back in May, as the national power grid was stretching thin because of high temperatures and rising demand, the Electricity Minister Ronald Alcalá and the US Chief of Mission John Barrett met to discuss plans to rebuild the country’s power grid.

In the early days of June, the National Assembly apparently advanced in the drafting of a partial reform to the Electric System and Service Organic Law, allowing the private sector to participate in the electricity service but still keeping the State mostly in control of it. Some have criticized the changes as insufficient.

After that, the interim government signed two memorandums of understanding in June. The first one with Argentinian company IMPSA, which involves two hydroelectric plants in Guayana: repairing the Macagua Dam and finishing the long-delayed and unfinished Tocoma Dam. 

IMPSA was formerly a State-owned company which won the contracts in 2008 when Cristina Kirchner was in charge but stalled around 2013-14 as the Maduro government stopped paying.

With the arrival of Javier Millei to La Casa Rosada, IMPSA was privatized and later sold to US consortium Industrial Acquisitions Fund (IAF), which decided to pick up the pending projects in Venezuela again right after the events of January 3rd, with Washington’s help.

The second MoU was with GE Vernova, a major US energy company which was once part of the famous conglomerate General Electric until its breakup in 2024. In the agreement, GE Vernova would assist with improving Venezuelan energy supply to one gigawatt in the first 24 months and more than five gigawatts over the course of four years. The company also committed to properly train personnel and transfer technology to modernize the infrastructure.

The second reading and final passing of the electricity reform is now on hold as the Rodríguez-controlled National Assembly says it is focused on more urgent, disaster-related matters.

Days after those preliminary agreements were announced and signed, the earthquakes occurred and some of the set priorities took a backseat. For example, the grid was heavily hit in places like La Guaira and power had to be restored in parts of Falcón. As mentioned earlier, Carabobo’s generation plants were also affected.

As those short-term fixes are on the top of the list, some of those positive developments from June have gone down on the to-do list, as the CEO of GE Vernova Scott Strazik admitted to Bloomberg: “Practically speaking, if not for the earthquake that had taken place that took us off track, we could be very close to a contract today…” The company is optimistic to start working this year.

In a similar vein, the second reading and final passing of the electricity reform law is now on hold as the Rodríguez-controlled National Assembly says it is focused on more urgent disaster-related matters. But the earthquakes deepened the many issues the national grid had been carrying for long, as this Runrun.es report indicates:

Letters of intent that the government signed with international consortiums to recover turbines in the Caroni (River) or to rehabilitate trunk transmission do not accelerate engineering times. Therefore, specialists insist that stabilizing the system is a complex process that’ll take years.

Until those projects materialize, the interior of the country will keep paying the cost of the system that works to its limits. The seismic doublet of June not only shaken distribution lines of those who usually don’t lose the light; for the rest of Venezuela, the true earthquake is day-by-day in the darkness of a structural crisis that is not solved with speeches.

The official response from Delcy Rodriguez is to simply throw the ball back and ask them to keep carrying that weight as she just announced a brand new plan to save electricity and water. The pretext: the effects of El Niño are being felt around the world and the solar radiation phenomenon that caused the original declaration of electric emergency in March is returning later in August.

For the record, there have been previous precedents of planned power rationing timetables like in 2016, when there was a situation similar to the current one. However, a rationing plan like the one announced for the summer of 2026 is the first in years. Corpoelec chose instead to send SMS messages of questionable accuracy. 

In the meantime, she can at least count on the Trump administration giving her a little help-out, thanks to the visit of John Barrett to Guri, along with experts from the US Energy Department.

Published on
04/08/2026 – 8:09 GMT+2

In addition to earnings reports this week, investors were also still weighing the impact from last week’s joint US-Japan currency intervention, analysts said.

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Japan’s benchmark Nikkei 225 slipped 0.3% to 63,585.58, as the US dollar inched up to 157.51 Japanese yen from 157.18 yen. The euro cost $1.1511, little changed from $1.1514. The dollar was trading at 160-yen levels before regulators stepped in to boost the yen’s value after it fell to nearly 40-year lows.

Some analysts said the effectiveness of such an intervention remains uncertain as it doesn’t address the fundamental economic reasons behind the currency fluctuations, including inflation, interest rates and the relative strengths of the economies.

“A US-backed operation carries far more signaling weight than Tokyo acting alone, and the pledge of further action will give speculators pause. But any US contribution will probably be constrained by size,” a report by BMI, a unit of Fitch Solutions, said.

Matthew Ryan, head of market strategy at global financial services firm Ebury, noted the latest effort could have some impact because it appears to signal a real change in monetary policy rather than just a one-time defensive move.

“This is an historic and meaningful development for the yen, which materially improves confidence in our mildly bullish call for the currency,” he said.

Markets unsettled

South Korea’s Kospi sank 1.3% to 6,174.72. Australia’s S&P/ASX 200 added 1.2% to 9,129.00. Hong Kong’s Hang Seng fell 0.5% to 25,881.99, while the Shanghai Composite gained 0.2% to 3,802.61.

Markets remain unsettled by swings for stocks of companies that make computer chips. They’ve been veering up and down for weeks on worries about whether their surging revenues because of the artificial-intelligence boom are sustainable.

Dow hits all-time high

On Wall Street, share prices rallied Monday after easing oil prices helped calm worries over inflation. The S&P 500 jumped 1.5% and is just 0.1% below its record set earlier this summer.

The Dow Jones Industrial Average, which measures a narrower slice of the US stock market, climbed 693 points or 1.3% to an all-time high, while the Nasdaq composite leaped 2.1%.

Oil prices rebound

In energy trading in Asia early Tuesday, benchmark US crude gained 84 cents to $81.18 a barrel. Brent crude, the international standard, jumped $1.15 to $84.92 a barrel.

A day earlier, oil prices dropped more than 5% after US President Donald Trump said over the weekend that he had decided to hold off on new strikes against Iran at the urging of allies in the region.

Brent’s price careened between $72 and $102 last month as worries rose and fell over the war in Iran and when oil tankers would be allowed to freely exit the Persian Gulf again to deliver crude to customers worldwide.

The yield on the 10-year Treasury sank to 4.68% from 4.75% late Friday. It remains well above its 3.97% level from before the war with Iran.

Additional sources • AP

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