Business in Venezuela

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.

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.

Cashea ad on the Nasdaq tower. Photo: Romina Hendlin, Cashea

Cashea just announced it raised another $60m for its Series B round, led by FinSight Ventures, bringing its total capital raised (all equity) to $100m in 2026 alone. Another amazing fit for the already impressive Venezuelan BNPL king. In the same week, we knew that Colombia’s Grupo Nutresa acquired ice cream manufacturer Tío Rico.

The big question after these two announcements is whether Venezuela has finally become investable. Does the potential return of the capacity to do business, to invest in the country, outweigh its risks? In the long and medium term, it does, but in the short run it still needs a lot of work. 

Venezuela remains very dependent on oil. This sector is held closely by the State, and I speculate that, after the US took over the reins of the fuel commercial activity, a bigger size of the GDP is concentrated in oil and gas than in previous years. According to Financial Times, this year the US has collected about $13bn since January in oil revenue, while in 2025 and 2024 PDVSA reported collecting $14.7bn and $17.5bn, respectively. So we could expect at least $20bn in oil revenue by the end of the year (+30%, not bad). Until that income is divested in the economy in a hopefully efficient manner and trickles down to the sectors that directly impact the end consumer, the rest of the country’s value chains remain constrained.

So, considering we cannot count on oil yet, the rest of the economy will need to do some legwork that involves both the efforts of the public sector and the private sector to attract international investors. The headlines about Chasea and Tío Rico might suggest that this is working. However, conditions haven’t changed much since before the economic devastation.

The exchange rate gap appears to have narrowed, but recent monthly inflation figures seem to have reversed the gains in that front from previous months (6.3% in May, 13.8% in June, according to the Central Bank BCV). The biggest indicator right now to measure business sentiment, according to Guillermo Arcay (and I agree with him), is the BVC index, which has fallen from its all-time high of 7,331.21 points in March to around 5,170–5,210 points, a 29% decline that indicates the euphoria and frenzied sentiment have subsided.

First, let’s dissect the “whys” of the two major deals that have put Venezuela on a better side of the headlines after the terrible devastation of June 24th. Because in spite of the earthquakes, there were still a lot of issues that international investors need to be clearer about before they swarm the market and become part of the eventual recovery.

$100M por el buche

Investment rounds are usually carefully considered and longer to close than they appear.

Cashea was already on a path to raise an enormous amount of capital; even in a similar economic scenario without the political change and the earthquakes, they would still have raised a huge amount in 2026. However, how much upside could this new macroeconomic scenario have contributed to the rounds reaching $100 million? 

The interest of these venture capital firms (Finsight Ventures, Spice Expeditions, and others) that were already investing in emerging markets stemmed more from the company itself than from the country’s promise of returning to greatness. It’s a bet on the jockey, not the horse. The reason for continuing to invest in the only relevant player in Venezuela’s BNPL sector, which Cashea basically revived by itself, is its operational efficiency, innovation genes, and discipline. They are not simply a first-mover: they did build a business to last. They make it seem easy, though it was certainly not.

The other major news came from Grupo Nutresa’s acquisition of Tio Rico, a brand loved by Venezuelans (remember Bati Bati?) and the main competitor of Helados Efe, owned by Empresas Polar. 

Sold by Mack (an automobile company) for $30m according to familiar sources reported by Bloomberg, this announcement looks more like a typical baron play of buying equity in a once promising business at the price of “vacas flacas”.

Two months ago, Grupo Nutresa also bought another ice-cream-making company in Colombia called Mimo, for about $12-15m, which doesn’t sound so bad, except this company represents only 5.8% of market share in that country, while Tío Rico could easily possess 50% of the market share in Venezuela. Just double the price for 10 times the share. So in this case it was an equity play by the Gillinsky family, which controls Nutresa. They are fulfilling their prophecy of “dumping” the market with Colombian products, acquiring cheap equity stakes in major companies and not investing a single dime in CAPEX, waiting to see how things play out.

I’ve even seen the appetite for opportunities in both tech and more traditional sectors by helping international investors be exposed to those deals. The appetite is there, but the conditions aren’t right just yet; investors still need to trust the public sector before any major CAPEX investment is played out, and private companies need to demonstrate professionalism, show a strategic mindset to achieve operational efficiency, and prove their commitment to growth, which is so needed to calm the nerves of investing in Venezuela.

Low prices, equity plays in real estate, and quick wins are not enough to Make Venezuela Prosperous Again. The private sector needs to be open to innovation, be more transparent, and appeal to a language that might be unknown to them but common to foreign capital.