PDVSA

Recently, the United States reached a new historic milestone: it produced over 13.6 million barrels per day, a staggering feat for a country that many thought had peaked in 2008 when production bottomed out at 5 million bpd. This staggering increase was not achieved by a state giant, but by an ecosystem of thousands of independent operators driven by market-based incentives that, in Venezuela, might seem from another planet.

Meanwhile, Venezuela has traveled the opposite path: from a proud peak of 3.7 million bpd in 1970, it has collapsed to a stagnant output below 1 million bpd. 

In Texas, the landowner owns the oil; in Venezuela, it is the State—which claims, all the while, to represent us all.

The hundred-year war

Since the Los Barrosos II blowout in December 1922, our oil history has been defined by a relentless tug-of-war between private capital and the State over the capture of oil rent. This conflict is not unique to Venezuela, but as we enter this “third opening,” the question is unavoidable: how do we prevent a third nationalization?

Having done it twice before (1976 and 2006), Venezuela has established a precedent that alters risk assessment across all investment horizons. How can we guarantee investors that history won’t repeat itself? While often sold as a patriotic triumph, nationalization is a terminal breach of contract and a direct assault on property rights, deterring the very capital profiles that otherwise would be participating. International arbitration, legal reforms, and institutional frameworks are necessary, but they are not sufficient.

Government take and the global race

To put things in perspective: before the 2026 reform, the Venezuelan fiscal system was among the least competitive on the planet. Between royalties on gross income, income tax (ISLR), and “windfall profit” taxes, the State extracted a “Government Take” that often exceeded 80%, with marginal tax rates reaching up to 95% depending on price thresholds. In a scenario where the operator’s net margin was squeezed to a minimum, production became a game of survival and reinvestment became technically impossible.

While the January 2026 reform moves in the right direction, we aren’t just competing against our own past; we are competing against the world. Consider the current margins (Operator Share) in the region:

• Canada (Alberta, Heavy Oil): Private 50%-55% | Government 45%-50%
• Texas (Permian Basin): Private 45%-55% | Government 45%-55%
• Colombia (New Reforms): Private ­40% | Government ­60%
• Brazil (Pre-Salt): Private 39% | Government 61%
• Guyana (2025 Model): Private 25%-35% | Government 65%-75%
• Venezuela (2026 Law): Private 20%-35% | Government 65%-80%

Even with the recent reform, Venezuela is far from being a “bargain” for long-term investment.

The proposal: from State-partner to citizen-owner

To mitigate expropriation risk and attract long-term capital, I propose a model built on four foundational pillars:

• Private Capital-Citizen Partnership: The State is removed from operations. Incentives are aligned directly between citizens—the ultimate owners of the subsoil—and those who risk the capital to extract it.

• Zero Corporate Taxes (Tax Displacement): Eliminate corporate income tax, royalties, and all “shadow” taxes at the source. This slashes the operational break-even to technical average levels of $30 to $40 per barrel, turning “iron cemeteries” into profitable ventures even in low-price environments. This is not a tax holiday, but a redirection of the fiscal take: the operator delivers a major share of the value directly to the citizens, while the State sustains itself by taxing the total income of the citizenry and companies in the rest of the economy.

• The Citizen Dividend (Oil-to-Cash): Instead of paying a traditional tax to a discretionary Treasury, the operator delivers 50% of its net profit—effectively a flat tax paid to the owners—directly into a sovereign trust (or similar non-state mechanism) managed by top-tier international banks. While 50% is a significant share, the absence of any other fiscal burden makes this model one of the most competitive in the region. This trust distributes periodical dividends to every Venezuelan citizen, including those abroad. The State then funds its operations by taxing these dividends as part of the citizens’ total income via personal income tax (ISLR) and other tax sources from a diversified economy. This ensures that the government’s budget depends on the collective prosperity of its people, not on political control over the oil.

• The Citizen as “Guardian” and Auditor: This is the ultimate shield. In 1976 and 2006, the State nationalized because it was easy to seize control from a “multinational” and hand it to a bureaucracy. Under this scheme, any government attempting to expropriate would be taking directly from the pockets of 30 million owners. Transparency is embedded: citizens monitor production and distributions through real-time digital platforms, independent audits, and other decentralized oversight mechanisms. The citizen ceases to be a spectator and becomes the industry’s most powerful defender.

Unlike the State, whose lust for oil rent is political and lacks immediate consequences for those in power, the citizen acts with the prudence of an owner—because they become one. Under this model, any attempt to “suffocate” the private partner translates immediately into a drop in personal dividends. Private ownership of the benefit is, in itself, the best guarantee of stability for capital.

Application and reality

Under this model, the direct net profit split for the oil industry would be: Private 50%, Citizens 50%, State 0%.

This “State 0%” applies exclusively to the source to insulate the industry from political rent-seeking. It does not mean a zero-revenue State; the government continues to fund its functions, but through a transparent tax system (ISLR, VAT) derived from a citizen-owned economy.

To illustrate, with oil at $100 and production at 3.5 million bpd, each citizen would have received $1,500 annually ($6,000 for a family of four). At a $60 base price, the dividend would be $640 per person. Today, with production stalled below one million barrels, a citizen would receive a mere $185. It is modest, but it represents the starting point of a virtuous cycle where the State only prospers if its citizens do first.

Herein lies the virtue of the model: the alignment of interests. Under the current system, citizens watch from the sidelines as oil wealth vanishes into the state vortex. With this approach, each Venezuelan has a personal stake: the more their private partner thrives, the more they themselves benefit. Citizens move from passive critics to primary stakeholders in the nation’s industrial growth.

Considerations for a new Venezuela

Under other circumstances, I might not be a proponent of direct “cash” transfers. But given the alternatives, it is the “lesser evil”. The political class will likely claim this is neither feasible nor “patriotic.” For many politicians, the incentive is two-fold: the salivating prospect of managing an immense oil “booty,” and the recurring ideal of “doing good” with other people’s resources.

Still in doubt? Look at our track record: despite having the world’s largest proven reserves and over 20 different administrations of every political stripe since 1922, the State captured and managed over $1.2 trillion in rent between 1920 and 2015. The result? A Guinness world record in squandered booms, the largest migration in the hemisphere without a formal war, and unprecedented institutional destruction.

Isn’t it time to withdraw the State from oil? 

This proposal would achieve:

• Real competitiveness: By matching Texas and Alberta margins (50%+ for the private sector), we compensate for institutional risks with top-tier global profitability.
• A limited State: The State ceases to be an inefficient businessman and becomes an arbiter: providing control, arbitration, and security. Its funding would come from taxing other economic activities, forcing it to foster general prosperity rather than living off the subsoil.
• A path towards a dividend-producing nation: Why not extend this to all extractive activities (gas, gold, iron, rare earths)? Perhaps the gold of the Arco Minero would stop being a black hole and become a direct dividend, shielding resources from looting and opacity.

The January 2026 reform is just a sigh in a prolonged agony. We cannot expect different results by doing the same thing. The “Hundred-Year War” over oil rent has left the State as a jailer rich in promises and a citizenry poor in realities.

Avoiding a third nationalization requires moving the subsoil out of the political arena and into the sphere of economic freedom. The US does not dominate markets by government mandate, but through an ecosystem that rewards risk and efficiency. Venezuela can emulate this success, but only by breaking the State lock and allowing a fabric of investors to flourish in direct alliance with citizens.

True sovereignty is not the State running the wells; it is Venezuelans themselves being the real owners of the benefits. Only through this pact of ownership can we hope that oil becomes, at last, an engine of development and not the tool of our own institutional destruction.

Caracas, February 20, 2026 (venezuelanalysis.com) – The Trump administration is forcing all royalty, tax, and dividend payments from Venezuelan oil production be paid into accounts managed by Washington.

The mandate reinforces the White House’s control over Venezuelan crude export revenues in the wake of the January 3 military strikes and kidnapping of President Nicolás Maduro, as well as a naval blockade imposed in December.

The US Treasury Department updated its FAQ section on February 18 to clarify conditions on recently issued sanctions waivers allowing expanded participation in Venezuela’s oil sector to Western corporations.

Under the licenses, only “routine payments of local taxes, permits, and fees” to Venezuelan authorities are permitted.

“Other payments, including royalties, fixed per-barrel production levies, or federal taxes to blocked persons, such as the Venezuelan government or (state oil company) PDVSA, must be made into the Foreign Government Deposit Fund,” the text read.

The acting Rodríguez administration has yet to comment on the new restrictions. 

Since January, Washington has imposed control over Venezuelan crude exports, with proceeds deposited in a US-administered account in Qatar. US Energy Secretary Chris Wright announced recently that funds will now be deposited directly in a US Treasury account. Senior administration officials have stated that the arrangement gives the White House “leverage” to condition Venezuelan government policies, while Secretary of State Marco Rubio stated that Caracas must submit a “budget request” to access its own oil revenues.

At least US $500 million, out of an initial deal estimated at $2 billion, have been returned to Venezuela and offered by banks in foreign exchange auctions. Venezuelan authorities have also reported the import of medicines and medical equipment from US manufacturers using “unblocked funds.”

On Thursday, the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 50A allowing select firms to conduct transactions and operations related to hydrocarbon projects with PDVSA or any other Venezuelan public entity. The document mirrors General License 50 issued on February 13 but added French firm Maurel & Prom to a list including BP, Chevron, Eni, Repsol, and Shell.

Maurel & Prom’s main project in the Caribbean nation is a minority stake in the Petroregional del Lago joint venture, which currently produces 21,000 barrels per day (bpd). The company’s executives recently held a meeting with Acting President Delcy Rodríguez as part of Caracas’ efforts to secure foreign investment.

In recent weeks, the Trump administration has issued several licenses to boost US and European involvement in the Venezuelan energy sector, with imports of diluents, inputs and technology now allowed. General License 49, issued on February 13, demands that companies apply for a special license before striking production and investment deals with Venezuela.

The US Treasury issued sanctions waivers while maintaining existing coercive measures against the Venezuelan oil industry in place, including financial sanctions against PDVSA. The licenses likewise block any transactions with companies from Cuba, China, Iran, North Korea, and Russia.

The selective flexibilization of sanctions followed the Venezuelan National Assembly’s approval of a pro-business overhaul of the country’s Hydrocarbon Law. The reform grants private corporations expanded control over operations and sales, while opening the possibility for disputes to be taken to external arbitration.

The reformed law also allows the Venezuelan executive to arbitrarily reduce royalties and a new “integrated tax,” capped at 30 and 15 percent, respectively. The executive is likewise entitled to grant reductions to the 50 percent income tax set for the oil industry if deemed necessary for projects to be “internationally competitive.”

According to US-set conditions and the reformed law, minority partners such as Repsol are authorized to sell crude from Venezuelan joint ventures before depositing the owed royalty and tax amounts, as well as dividends belonging to PDVSA, to US Treasury-designated accounts.

The initial crude sales as part of the Trump-imposed arrangement were conducted via commodity traders Vitol and Trafigura, which lifted cargoes at Venezuelan ports before re-selling them to final customers. However, according to Reuters, US-based refiners including Phillips66 and CITGO are looking to secure crude directly from Venezuela to maximize profits.

CITGO, a subsidiary of PDVSA, is close to being taken over by vulture fund Elliott Management following a court-mandated auction to satisfy creditor claims against the South American country. The company has been managed by boards appointed by the US-backed Venezuelan opposition since 2019.

Caracas, February 15, 2026 (venezuelanalysis.com) – US President Donald Trump is considering a visit to Venezuela, though he did not specify when the trip might take place or what agenda it would entail.

“I’m going to make a visit to Venezuela,” Trump told reporters outside the White House on Friday. 

The US President addressed the press ahead of a trip to Fort Bragg, North Carolina, to meet soldiers who participated in the January 3 military attacks against Venezuela and the kidnapping of President Nicolás Maduro and First Lady Cilia Flores.

Questioned by a journalist, Trump stated that Washington recognizes the Venezuelan government led by Acting President Delcy Rodríguez as the country’s legitimate authority.

“We are dealing with them, and they have done a great job,” he stated. The White House refused comment on whether the recognition was the administration’s official stance.

In 2019, the first Trump administration recognized the self-proclaimed “interim government” headed by Juan Guaidó as the country’s legitimate authority, prompting the Maduro government to sever diplomatic ties. The US later transferred its recognition to the defunct opposition-controlled National Assembly whose term expired in January 2021.

Since the January 3 attacks, Caracas and Washington have fast-tracked a diplomatic rapprochement, with US Chargé d’Affaires Laura Dogu arriving in the Caribbean nation in early February. An official recognition of the Rodríguez acting government could pave the way for the restructuring of Venezuela’s sizable foreign debt.

In his Friday press remarks, Trump further described relations with Venezuelan leaders as being “as good as one could hope for,” and added that “the relationship with Venezuela today is a 10.”

Trump additionally highlighted progress in Venezuela’s oil sector.

“Oil is flowing, and other nations are paying a lot of money for it, and we are handling it. We are refining it,” he said. Since January, the White House has imposed control of Venezuelan oil exports, with proceeds deposited in bank accounts in Qatar before being partly rerouted to Caracas under US-set conditions.

Earlier last week, Venezuelan Acting President Delcy Rodríguez emphasized in an NBC interview that Maduro remains the country’s legitimate president. She also disclosed that she has spoken twice with Trump and has had “more frequent” contact with Secretary of State Marco Rubio, and expressed “gratitude” for the “respectful and courteous” nature of the talks.

Venezuela’s acting president went on to announce that she has likewise been invited to visit the US. “We are considering going once we establish cooperation and can move forward with everything,” she said.

The invitation reportedly arose during a recent visit to Caracas by US Energy Secretary Chris Wright, who was hosted by Rodríguez at Miraflores Palace on Wednesday. 

Wright and Rodríguez later toured the Petroindependencia crude upgrader, a mixed venture between Venezuela’s state-owned PDVSA and Chevron, in the Orinoco Oil Belt.

The Trump administration official announced that Chevron would invest US $100 million to modernize operational facilities, with the goal of “doubling [Petroindependencia’s] productive capacity within 12 to 18 months and quintupling it within five years.” Petroindependencia has a current output of 40,000 barrels per day (bpd).

US issues new oil licenses

Following Wright’s Venezuela visit, the US Treasury Department issued two general licenses, 49 and 50, aimed at boosting conditions for Western multinational corporations to operate in Venezuela’s energy sector.

The first license allows for the negotiation and signing of future investment contracts, contingent upon the potential issuance of a specific license. The second waiver authorizes Chevron, BP, Eni, Shell, and Repsol to conduct transactions and operations related to hydrocarbon projects with PDVSA or any other Venezuelan public entity.

Repsol (Spain) and Eni (Italy), like Chevron, participate in oil and gas joint ventures in the South American country, whereas the UK-headquartered Shell and BP are set to lead offshore natural gas projects alongside Trinidad and Tobago’s National Gas Company (NGC) in Venezuelan waters. 

However, GL50 requires that any contracts fall under US jurisdiction and mandates that all payments to “blocked” entities—as sanctions against PDVSA and Venezuela’s banking system remain in place—be made to accounts designated by the US Treasury.

It also explicitly prohibits transactions involving any person or entity linked to Russia, Iran, North Korea, Cuba, or China, as well as vessels sanctioned by Washington.

The Trump administration has loosened restrictions against the Venezuelan energy sector, including allowing the import of US diluents, inputs and technology, following a recent pro-business overhaul of the country’s Hydrocarbon Law. The reform granted expanded benefits for private corporations, including reduced fiscal responsibilities and expanded control over operations and sales.

Upon leaving Caracas, Energy Secretary Wright claimed that “structural reforms” would continue in Venezuela, with changes to “labor laws, the court system and the banking system.”

Edited and with additional reporting by Ricardo Vaz from Caracas.

Caracas, February 12, 2026 (venezuelanalysis.com) – Venezuelan Acting President Delcy Rodríguez hosted US Energy Secretary Chris Wright at Miraflores Palace in Caracas on Wednesday.

Wright is the highest-ranked US official to be received at the presidential palace in over 25 years. The high-profile visit took place a little over a month after US forces bombed Caracas and kidnapped Venezuelan President Nicolás Maduro and First Lady Cilia Flores on January 3.

Rodríguez and Wright, who was accompanied by US Chargé d’Affaires Laura Dogu, held a private meeting before briefly addressing the press.

Venezuela’s acting leader centered her statements on a joint “energy agenda” between Caracas and Washington that could be “mutually beneficial.” The talks reportedly included discussions on oil, natural gas, electricity, and mineral projects.

“The main point in our agenda is the establishment of a long-term productive alliance, with an energy agenda that becomes the engine of our bilateral relations,” Rodríguez told reporters. “This energy agenda should be effective, complementary, and beneficial for both countries.

Defending the recent rapproachment, she pointed to Venezuela and the United States’ energy ties dating back 150 years. 

“Our relationship has had its ups and downs in political terms, but I am confident that through diplomacy we can overcome our differences,” Rodríguez added. She made no mention of Maduro in her public remarks. 

Rodríguez, who served under Maduro as vice president, assumed the presidency on an acting basis on January 5 as directed by the Supreme Court’s Constitutional Chamber. Maduro and Flores have pleaded not guilty to charges including drug trafficking conspiracy.

Venezuelan authorities have fast-tracked a diplomatic reengagement with the Trump administration since the January 3 attacks. In a recent interview, National Assembly President Jorge Rodríguez, brother of the acting president, emphasized the prospect of establishing a “win-win” relationship with Washington.

The parliamentary leader stated that Venezuela was “adapting” legislation to attract US investment. The Venezuelan legislature recently overhauled the country’s Hydrocarbon Law to grant increased incentives to foreign corporations. Under the reformed law, private corporations will enjoy reduced taxes and royalties, as well as expanded control over operations and sales and the prerogative to take disputes to external arbitration bodies.

For his part, Wright said that he brought “a message” from Trump, that the US president was committed to a “broader agenda to make the Americas great again.” The Energy Secretary praised a “wonderful and candid dialogue” with Venezuelan leaders and spoke of “tremendous opportunities” in the Caribbean nation’s energy sector.

Wright highlighted the Trump administration’s recent sanctions waivers allowing US companies to return to the Venezuelan oil sector and permitting exports of diluents, other inputs, and technology for oil operations to the South American country.

“We have been working to issue licenses to existing businesses, to new businesses that want to enter Venezuela, for Venezuelan companies to buy [US] products and raise oil production,” he continued. “We want to set the Venezuelan people, and the economy, free.”

On Thursday, Rodríguez and Wright visited Petroindependencia, a crude upgrader in the Orinoco Oil Belt. According to reports, Wright is also scheduled to visit Petropiar. Chevron is a minority stakeholder in both joint ventures. The US official will also hold meetings with business executives, and claimed he wants to “improve the management” of PDVSA.

Since January, the Trump administration has exerted control over Venezuelan oil exports. Commodity traders Vitol and Trafigura have lifted Venezuelan crude to resell to other customers, while depositing proceeds in US-run accounts in Qatar. Washington has thus far returned to Caracas US $500 million out of a reported $2 billion initial agreement.

The recent licenses likewise mandate that payments be made to accounts designated by the US Treasury and block transactions with companies from China, Cuba, Iran, North Korea and Russia. US forces have maintained a naval blockade and seized several tankers for allegedly transporting Venezuelan crude. PDVSA also remains under financial sanctions.

Former President Hugo Chávez (1999-2013) had a confrontational relationship with Washington, repeatedly denouncing US interventions abroad, including in Afghanistan, Iraq, Libya, and Syria. He likewise promoted several regional integration projects.

Maduro severed diplomatic ties with the US in 2019 after the first Trump administration formally recognized the Juan Guaidó-led self-proclaimed “interim government” as the country’s legitimate authority.

Despite the rapid rapprochement, the White House has yet to recognize the acting government of Delcy Rodríguez. The formal recognition could pave the way for a restructuring of Venezuela’s sizable foreign debt.

With astonishing speed amid so many postponed emergencies, the reform of the Organic Law on Hydrocarbons, enacted in 2006 by President Hugo Rafael Chávez Frías, has been approved. Amending the work of such a towering figure requires prudence and restraint. Let us examine the result.

First of all, what stands out is the unconstitutional attempt to repeal Article 151 of the Constitution of the Bolivarian Republic through Article 8 of a simple law, which proposes:

Article 8. Any doubts or disputes of any nature that may arise in connection with the activities covered by this Law and that cannot be resolved amicably by the parties may be decided by the competent courts of the Republic or through alternative dispute resolution mechanisms, including mediation and independent arbitration.

This article directly contradicts Article 151 of the Venezuelan Constitution:

Article 151. In the public interest contracts, unless inapplicable by reason of the nature of such contracts, a clause shall be deemed included even if not expressed, whereby any doubts and controversies which may raise concerning such contracts and which cannot be resolved amicably by the contracting parties, shall be decided by the competent courts of the Republic, in accordance with its laws and shall not on any grounds or for any reason give rise to foreign claims.

There is no doubt that the Constitution of the Republic is the Supreme Law of the Nation and therefore cannot be repealed by a lesser legal norm. Contracts on hydrocarbons are in the public interest, as Article 12 of our Constitution considers them to be “public domain assets”:

Article 12. Mineral and hydrocarbon deposits of any nature that exist within the territory of the nation, beneath the territorial sea bed, within the exclusive economic zone and on the continental sheaf, are the property of the Republic, are of public domain, and therefore inalienable and not transferable. The seacoasts are public domain property.

Articles 103, 126, paragraph 12, and 136, paragraphs 8 and 10, as well as Article 156, paragraphs 12 and 16 of the Constitution assign the same classification of public interest and public domain to mines and hydrocarbons.

This is a harmonious development of what Article 1 of our Constitution considers “Fundamental Principles”: immunity, the sovereign power not to be subject to foreign courts or jurisdictional bodies to decide disputes of internal public interest: “The Bolivarian Republic of Venezuela is irrevocably free and independent, basing its moral property and values of freedom, equality, justice and international peace on the doctrine of Simón Bolívar, the Liberator. Independence, liberty, sovereignty, immunity, territorial integrity and national self-determination are unrenounceable rights of the Nation.”

These are not mere abstract principles. Sovereignty is the absolute and perpetual power of a political body to make its own laws, enforce them, and resolve for itself any disputes that may arise from their application. A state that loses any of these powers ceases to be sovereign and independent. This is what happens when we agree to resolve disputes over internal public interest issues not through our courts and laws, but “through alternative dispute resolution mechanisms, including mediation and independent arbitration.” Precisely because we handed over the resolution of the dispute concerning our sovereignty over Guayana Esequiba to “independent arbitration” [in 1899], that territory was taken from us.

Venezuela has systematically lost almost all disputes on matters of public interest brought before foreign bodies, which is why we withdrew from the infamous ICSID (International Centre for Settlement of Investment Disputes, part of the World Bank) and the Inter-American Court of Human Rights (IACHR, part of the OAS).

In short, if we allow external courts to decide on matters of public interest, how can we oppose foreign courts also judging our legitimate President Nicolás Maduro Moros and his wife, Congresswoman Cilia Flores, according to foreign laws?

The law we are examining includes numerous other objectionable proposals. Among them, Article 34 establishes that the creation of joint ventures and their operating conditions require only the mere “notification” of the National Assembly, which has no decision-making powers in matters so fundamental to the interests of the nation.

Articles 35, 36, 37, 38, and 40 [of the reform] progressively grant joint ventures and minority partners authority for the extraction, management, and commercialization of hydrocarbons, which Article 302 of our Constitution reserves for the Republic:

Article 302. The State reserves to itself, through the pertinent organic law, and for reasons of national expediency, the petroleum industry and other industries, operations and goods and services which are in the public interest and of a strategic nature. The State shall promote the domestic manufacture of raw materials deriving from the exploitation of nonrenewable natural resources, with a view to assimilating, creating and inventing technologies, generating employment and economic growth and creating wealth and wellbeing for the people.

Article 41 of the aforementioned law authorizes private companies to carry out the “integrated management” of exploitation, receiving crude oil as payment, which displaces PDVSA and the State from their decisive functions in the industry, as set forth in the aforementioned Article 302 of our Constitution.

Article 52 of the recently approved reform empowers the executive branch to reduce the amount of royalties at will when it is demonstrated “to its satisfaction” that the project’s economic needs justify it. It should be noted that the previous [2006] law allowed the nation to receive between 60% and 65% in royalties and taxes, while the provisions of the recently amended law allow multinationals to reduce this contribution to below 15%, depending on the category of assets and activity. This represents a significant reduction in public revenue from this source of up to 50% in favor of private operators, almost all of which are foreign.

Article 56 of the recently amended law defines a 15% “integrated hydrocarbon tax” but the executive is also allowed to reduce it at its discretion. Ultimately the national fiscal share can go down from 65% to 25%.

On the sensitive issue of royalties, Andrés Giuseppe noted in a study dated January 28, 2026 (Poli-data.com): 

This report thoroughly analyzes the premise that royalties, as compensation for the depletion of a non-renewable asset, should be inalienable and non-negotiable, and argues that any incentives for the industry should be limited to the scope of taxes on profits and not to the owner’s gross share. (…) The transition from the current legal framework to the 2026 proposal represents a significant change in the protection of oil revenues. While the [2006] law strictly limits the conditions under which payments to the State can be reduced, the reform expands the discretion of the National Executive. The 2026 reform introduces greater flexibility that, in practice, weakens the concept of royalties as a “floor” for state participation. Under the 2006 law, the reduction to 20% was restricted to specific fields with proven geological difficulties; in contrast, the new Article 52 allows the National Executive to reduce the royalty at its discretion for any project, provided that the lack of economic viability is demonstrated “to its satisfaction” (,,,) The oil royalty, historically linked to jus regale, represents the compensation that the exploiter of a non-renewable natural resource owes to the State for the right to extract and appropriate an asset that belongs to the public domain. In Venezuelan doctrine, this concept is based on Article 12 of the Constitution of the Bolivarian Republic of Venezuela, which establishes that hydrocarbon deposits are public property, inalienable, and imprescriptible.

The royalty, therefore, is non-negotiable and cannot be diverted from its spirit, purpose, and rationale to satisfy other legal obligations arising from different causes and motivations. Furthermore, the Organic Law on National Public Finance establishes: “Article 5. Under no circumstances is compensation against the Treasury admissible, regardless of the origin and nature of the credits to be compensated.” 

Compensation is an institution of private law whereby an individual can extinguish a debt with another individual by offsetting it against a debt that he or she has with that individual. As we can see, the Organic Law on National Public Finance itself, which has specific jurisdiction in tax matters, categorically prohibits it, which means that a citizen cannot cancel the payment of royalties on the grounds that he or she used that debt to satisfy another obligation.

In summary, numerous provisions of the recently reformed Organic Law on Hydrocarbons tend to diminish the Republic’s exclusive jurisdiction over hydrocarbon exploitation, enabling a gradual privatization of the industry. Other provisions make significant reductions in public revenue dependent on the discretion of officials, which do not take into account the real value of the hydrocarbons extracted but rather the alleged economic situation of the private company involved in the project. The overal result will be to significantly reduce the revenue generated by these resources, jeopardizing the financial management of state oil company PDVSA and that of the Republic itself.

Translated and with minor edits by Venezuelanalysis.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

Source: Luis Britto García

Caracas, February 11, 2026 (venezuelanalysis.com) – Venezuela’s oil output contracted to a two-year low following  Washington’s month-long naval blockade against the Caribbean nation’s crude exports.

The latest OPEC monthly report placed Venezuela’s January production at 830,000 barrels per day (bpd), down from 917,000 bpd in December, according to secondary sources. The figure is the lowest since May 2024. 

For its part, state oil company PDVSA reported 924,000 bpd produced in January, down from 1.12 million bpd the prior month. The direct and secondary measurements have differed over the years due to disagreements over the inclusion of natural gas liquids and condensates.

The output contraction was a result of the US Navy imposing a blockade on Venezuelan oil exports and seizing several tankers allegedly involved in Venezuelan crude shipments. The exhaustion of storage capacity forced PDVSA and partners to cut back production.

The blockade came on top of draconian sanctions that have stymied the Venezuelan oil industry for years. Since 2017, Washington has levied financial sanctions, an export embargo, secondary sanctions, and a host of other coercive measures aimed at strangling the country’s main source of foreign revenue.

Following the January 3 US military strikes and kidnapping of Venezuelan President Nicolás Maduro, Venezuelan oil began to flow once more under an arrangement imposed by the Trump administration. Commodity traders Vitol and Trafigura have been lifting Venezuelan crude, depositing proceeds in White House-administered bank accounts in Qatar, and offering cargoes to customers all over the world.

On Tuesday, the Venezuelan government denied a Bloomberg report that the country had shipped crude to Israel. According to the business outlet, the shipment would be delivered to the Bazan Group, Israel’s largest refiner. Bloomberg did not specify whether the Venezuelan crude cargo was purchased from Vitol, Trafigura, or another source. As part of the new US-imposed arrangement, the sale marks the first time Venezuelan oil will reach Israel since at least 2020, per Bloomberg. 

The Trump administration has sought to leverage its influence over the Venezuelan oil sector to pressure allies such as India to replace imports from US geopolitical rivals, including Russia and Iran. Indian public companies Indian Oil and Hindustan Petroleum are set to join private refiner Reliance Industries in purchasing Venezuelan oil, with 2 million barrels of Merey crude expected to be delivered in the coming weeks. Nevertheless, Venezuelan supplies are not expected to significantly alter global demand given the present output and the extra-heavy nature of Venezuelan crude blends.

US and European firms have likewise acquired Venezuelan cargoes in recent weeks.

For their part, Venezuelan acting authorities have courted foreign investment and enacted a pro-business overhaul of the country’s oil legislation. The reform offers lower taxes and royalties, as well as increased control over operations and sales, to private corporations, reducing the role played by the Venezuelan state.

Trump administration officials praised the oil reform for “eradicating restrictions” on private investment, while the US Treasury Department has issued several sanctions exemptions to boost US corporate involvement in the Venezuelan oil industry.

A January 29 license allowing US companies to purchase and market Venezuelan crude was followed up with a waiver on diluent exports to Venezuela on February 3. On Tuesday, the US Treasury published General License 48 permitting US exports of goods, technology and software for oil exploration to Venezuela.

The sanctions waivers demand that contracts be subjected to US law and forbid any transactions with companies from Russia, Iran, Cuba, North Korea, and China. They also mandate that payments be deposited in accounts determined by the US Treasury.

In early February, US officials confirmed that US $500 million from crude sales had been rerouted to the South American country, to be offered in foreign currency auctions by public and private banks. A further $300 million is expected in the coming days. 

However, the initial deal announced by Trump comprised 30-50 million barrels and an estimated $2 billion. Venezuelan authorities have not disclosed what portion of revenues the country will receive, while Trump has said the US will “keep some” of the income. 

Senior Trump administration officials have vowed to maintain control over Venezuelan oil exports for an “indefinite” period, with Secretary of State Marco Rubio claiming that the Venezuelan acting government headed by Delcy Rodríguez needs to submit a “budget request” before accessing the country’s oil proceeds.

Caracas, February 10, 2026 (venezuelanalysis.com) – National Assembly President Jorge Rodríguez said Venezuela has enjoyed a “very good understanding and relationship” with the Trump White House in the period since the January 3 US attacks.

In an interview with Newsmax’s Rob Schmitt aired on Monday, Rodríguez stated that Caracas and Washington have a “golden opportunity” to build a “win-win” relationship.

“Right now, we have opportunities for mutual respect, for cooperation, to build a win-win situation for both countries, for both peoples,” he said.

Rodríguez confirmed regular contact with US Secretary of State Marco Rubio in dialogue “based on mutual respect.” He added that US Secretary of Energy Chris Wright is expected in Venezuela in the coming days.

The two governments have fast-tracked a diplomatic rapprochement in recent weeks, with US Chargé d’Affaires Laura Dogu arriving in Caracas and meeting Venezuelan leaders on February 2.

Rodríguez, the older brother of Acting President Delcy Rodríguez, also defended recent legislation  pushed through by the executive and parliament, including an overhaul of Venezuela’s Hydrocarbon Law. On January 29, the National Assembly approved a pro-business reform that lowers taxes and royalties for private corporations while granting them expanded control over operations and sales.

“What we are doing is adapting laws so that it can promote investment especially from the USA,” Rodríguez told Schmitt. “We have an oil industry that needs developing, and if we [the US and Venezuela] can stay on the path of mutual respect and cooperation, we have a bright future ahead of us.”

The parliamentary leader emphasized that the Venezuelan government’s priority is to turn oil revenues into social welfare and promote education and healthcare in a “free market economy.”

The Trump administration’s January 3 military strikes also saw special operations forces kidnap Venezuelan President Nicolás Maduro and First Lady Cilia Flores. Rodríguez made one mention of Maduro and Flores in the interview, responding when asked by Schmitt that both should be released “immediately” in accordance with international law.

The Venezuelan president and first lady pleaded not guilty to charges including drug trafficking conspiracy in their January 5 arraignment. The next hearing is scheduled for March 26. 

Despite reiterated accusations of “narcoterrorism,” US officials have never provided evidence tying Maduro and high-ranking Venezuelan officials to drug trafficking activities, while specialized agency reports have found the South American nation to play a marginal role in the global narcotics trade.

In his interview with the pro-Trump news channel, National Assembly President Rodríguez additionally ruled out Venezuela holding elections in the near future.

“There will not be an election in this immediate period of time where the stabilization of the country has to be achieved,” he explained. “In Venezuela we have a very clear calendar for elections established in the Constitution.”

Maduro had begun his third six-year term in January 2025, while a new legislature took office on January 5, 2026, for a five-year period. Regional and municipal officials likewise started new four-year terms in the second half of 2025.

Rodríguez mentioned US Secretary of State Marco Rubio’s statements that, according to the Trump administration, the priority is stability in Venezuela. Rubio has claimed that the White House has a three-phase plan of “stabilization, economic recovery and reconciliation, and transition.”

In October 2001, two years into his presidency, Hugo Chávez made a trip to London to meet with then UK prime minister Tony Blair and other high-level officials.

Official records detail how the Venezuelan president’s proposed Hydrocarbons Law, a major restructuring of Venezuela’s oil industry, was high on the British agenda.

The law aimed to assert sovereignty over Venezuela’s resources by mandating at least 50% state ownership in mixed enterprises and increasing royalties on foreign oil interests.

This was a serious cause for concern for Britain, whose main interests in Venezuela centred on Shell, BP, and BG Group’s investments in the oil and gas industry.

“British companies have over $4bn already invested” in Venezuela, noted one Foreign Office official, with new investments of another $3bn planned for the oil industry.

Blair was thus instructed by advisers to impress on Chávez that the UK government was “following your proposed hydrocarbons legislation very closely”.

In private, Blair’s adviser and future MI6 chief John Sawers wrote that “the only reason for seeing him is to benefit British oil and gas companies”.

Sawers’ note drove at the core issue which had been guiding Britain’s relations with Venezuela for over a century: oil.

Declassified has combed through dozens of files in the National Archives which expose how the UK government has repeatedly sought to thwart the nationalisation of oil in Venezuela since it was first discovered during the early twentieth century.

Working in partnership with Britain’s leading oil corporations, the Foreign Office has resorted to political pressure, propaganda activities, and covert operations to maintain control over Venezuela’s lucrative crude. 

The origins of Britain’s interest in Venezuela’s oil

In 1912, Royal Dutch-Shell began operations in Venezuela and, two years later, the company – alongside US firm General Asphalt – discovered a petroleum field in the small town of Mene Grande.

George Bernard Reynolds, a geologist at Venezuelan Oil Concessions Limited (VOC), a Shell subsidiary, described the supplies as “enough to satisfy the most exacting”.

By 1920, the CIA reported that practically all of Venezuela’s oil production and its most promising concessions were held by Royal Dutch-Shell and two American companies, Jersey Standard (SOCNJ) and Gulf.

Indeed, Venezuelan oil controlled by Royal Dutch-Shell had increased by over 600% from 210,000 barrels in 1917 to 1,584,000 in 1921. 

“Is there any other company more conclusively British than this”, asked Sir Marcus Samuel, chairman of the Shell Transport and Trading Company, in June 1915, “who have proved themselves more willing and able to serve the interests of the Empire?”

But foreign control over oil had serious consequences for Venezuela’s land and people.

In 1936, oil workers in Maracaibo called a general strike in response to low wages, poor living conditions and the association of oil firms with the late dictator, Juan Vicente Gómez. It lasted for 43 days, during which time oil production decreased by 39%.

In response, Venezuelan president General Eleazar López Contreras introduced a series of reforms to improve labour conditions.

This made him unpopular with the British and US oil executives, who were described by US ambassador Meredith Nicholson as belonging to “the old school of ‘imperialists’ who believed that might – in the business sense – was right”.

Venezuela’s oil nonetheless remained central to the British imperial project and, by the outbreak of World War Two, Venezuelan oil “took on particular significance within the British war effort as oil from the Middle East became less accessible following the closure of the Mediterranean in 1940”, according to research by academic Mark Seddon.

Officials therefore became increasingly worried about nationalisation in Latin America, particularly after foreign oil interests – including those of Shell – had been expropriated in Mexico in 1938.

That year, for instance, British diplomat John Balfour wrote: “We should do all we can to show that it is not in the interests of a Latin-American country like Mexico to eliminate British interests from participating in the exploitation of its oil resources”.

A dangerous opponent of capital

Concerns around nationalisation arose once again during the Rómulo Betancourt administration in the 1940s.

He was described by the Foreign Office in 1945 as “by far the most dangerous opponent of capital in Venezuela”, while the oil companies worried about his past support for communism.

These concerns proved overblown as Betancourt developed into a staunch anti-communist. According to a CIA file dated March 1948, Betancourt and his predecessor, Rómulo Gallegos, met to discuss “the proposed outlawing of the Communist Party in Venezuela.”

The first step, according to the document, “was the dismissal from the [oil workers union] Fedepetrol of all Communist Party petroleum syndicate delegates”.

Shell’s directors nonetheless responded positively to the military coup which toppled Betancourt in 1948.

They believed, as UK ambassador John H. Magowan noted in February 1949, that the new administration would “reverse the Betancourt tendency to hostility towards the ‘capitalists’ and ‘colonial’ powers”.

While US-owned SOCNJ had emerged as Venezuela’s main oil producer by this time, Shell remained the second most important player and, by 1950, the company had centralized its operations, building a modernist headquarters in northern Caracas.

The propaganda campaign

During the 1960s, as the shadow of the Cold War cast over Latin America, a propaganda unit within the Foreign Office secretly worked to protect Britain’s oil interests in Venezuela.

That unit, named the Information Research Department (IRD), had been set up in 1948 to collect information about communism and distribute it to contacts worldwide.

The goal was to build resilience against communist and other national liberation movements while cultivating foreign agents of influence such as journalists, politicians, military officers, and businessmen.

By 1961, the IRD viewed Venezuela as the third most important country in Latin America in light of the risk of left-wing “subversion” and Britain’s strategic stake in the country’s oil industry.

That year, the IRD worked with Britain’s intelligence services to promote a boycott of El Nacional, the largest newspaper in Venezuela, with the goal of forcing it “to abandon its campaign in favor of expropriating foreign companies and promoting communist agitation”.

The campaign not only had the backing of powerful conservative and anti-communist groups in Venezuela but also the foreign oil companies, who agreed to suspend their advertising in the newspaper.

By 1962, IRD officer Leslie Boas was able to boast that El Nacional had “changed its tone in a great way”, with the newspaper’s circulation also dropping from 70,000 to 45,000 per day.

Reactionary networks in Venezuela were also being covertly funded by Shell in this period, according to recently declassified files.

In April 1962, Boas wrote to IRD chief Donald Hopson about the Latin American Information Committee (LAIC) which was “now doing quite active work… in Venezuela”.

The first director of LAIC was Enno Hobbing, who divided his work between Time/Life magazine and the CIA and later played a role in Chile’s 1973 coup d’état.

Boas explained that he “had a long talk with Hobbing […] and there do seem to be one or two ways in which we can be of mutual help without either of us burning our fingers”.

Such help would include “an unattributable supply of IRD material to contacts” of LAIC in return for LAIC supplying Boas with access to and information about local anti-communist networks.

Remarkably, Boas disclosed that Shell was “contributing financially to” LAIC alongside US retailer Sears Roebuck and other “International Business Machines”.

He added that “none of the local branches of these companies such as Shell de Venezuela are cooperating either financially or overtly in any way, it is being done through their head offices and LAIC who have their own offices in New York”.

It was during this period that Shell and BP were also providing direct, “handsome” subsidies to the IRD to promote their oil interests across Latin America, the Middle East, and Africa.

Nationalisation rekindled

The IRD continued to promote Britain’s oil interests in Venezuela through the 1960s and 1970s, until the unit was closed down in 1977.

In a country assessment sheet for Venezuela, dated 1969, an IRD official noted how “we have considerable investments in the country, particularly those of Shell, whose fixed installations alone have been conservatively valued at £300 million”.

The official continued: “Shell’s operations in Venezuela play an important role in the company’s very substantial contribution in invisibles [earnings through intangible assets] to our balance of payments”, noting that Britain’s key objective was therefore “to protect our investments”.

Two years later, IRD field officer Ian Knight Smith wrote to London with concerns about how “the emotional issue of economic nationalism, always a potent force in a country whose main natural resources are largely in the hands of foreign companies, was [being] rekindled”.

Worse still, the Venezuelan president, Rafael Caldera, had “made his own contribution to the new nationalism – in the shape of a law nationalising all natural gas deposits”.

The IRD consequently prepared briefings “on communist instigation of charges against the international oil companies” to be shared with contacts across Venezuela.

In addition, the propaganda unit “cast around for material with which to brief IRD contacts who are in a position to influence government policy or legislation affecting foreign investments in Venezuela”.

Officials were particularly interested in commissioning a “well-researched paper on the positive aspects of foreign investment in developing countries, helping to counter the growing assumption, carefully fostered by the extreme left, that all foreign investment is basically suspect”.

It was within this context that the Foreign Office privately advised that “we should protect as far as we are able Shell’s continued access to Venezuelan oil”.

Share of the gravy

For all its efforts, the IRD was not able to turn the tide of nationalisation in Venezuela, with plans developed during the 1970s for the early reversion of foreign oil interests to the state.

Venezuelan oil was officially nationalised in 1976, with foreign companies including Shell being replaced by the state-owned Petróleos de Venezuela (PDVSA).

But this was by no means the end of the road for Britain’s oil interests in Venezuela.

In a background briefing for a visit by Venezuelan president Carlos Andrés Pérez, dated November 1977, the Foreign Office observed that “Shell is still our largest single interest”.

The official added: “It should not be forgotten that despite nationalisation our largest commercial stake in this country is still Shell, and although they no longer, since nationalisation, produce oil here, they earn millions of dollars from their service and marketing contracts with their former company”.

The company also continued “to off-take very large volumes of Venezuelan oil for sale mostly in the US and Canada”.

Another official remarked upon the “furious activity of all European countries, including ourselves, in trying to get our share of Venezuela’s economic gravy”.

By 1978, the New York Times went so far as to say that Shell was “busier in Venezuela than before the oil industry was nationalized”.

‘Shell has been active‘

Even still, Britain’s oil firms wished to return to Venezuela’s oilfields.

Those hopes were stoked in the early 1990s by the “Oil Opening” of President Carlos Andrés Péres, whose austerity measures led to an explosion of poverty and street protests, but dashed once again by Chávez’ proposed Hydrocarbons Law in 2001.

In the lead-up to Chávez’ visit that year to London, Britain’s leading oil companies were once again in the prime minister’s ear about the projected impact on their interests.

Blair’s briefing noted unambiguously that UK and US companies were “concerned” about the oil reforms and wanted them watered down.

Days before the visit, Shell’s chairman Philip Watts offered suggestions on how Blair might handle Chávez.

“As you may have appreciated, Shell has been active in helping in the preparations for the visit through the Foreign Office”, Watts wrote.

“Considering the importance of the energy sector for both the Venezuelan and UK economies, I thought the PM may appreciate a small briefing on our… plans in Venezuela”, he added.

Those plans involved ameliorating the “uncertain investment climate” and softening the “fiscal and legal framework” in the country.

As part of the charm offensive, Watts also hosted a “farewell” banquet for Chávez, to which foreign secretary Jack Straw and other senior ministers were invited.

BP and BG Group also “registered their interest with No.10 about the visit”, with BP preparing “to put their case… forcefully” in favour of a meeting between the two leaders.

‘The Americans are concerned‘

The US government also weighed in on the matter.

On 18 October, an official in the British embassy in Washington wrote to London that “the Americans are concerned about the impact that the Hydrocarbons Law will have on investment in the energy sector”.

They continued: “The major oil companies, including BP, had all made clear that its tax and restrictive joint venture productions would hinder their operations”.

The US state department “thought it would be particularly useful for Chavez to hear these concerns in London, given his tendency to discount messages from the US”.

To this end, the George Bush administration hoped Blair would “talk sense into [Chávez] on the Hydrocarbons Law, where BP are among those who stand to lose”.

Further pressure was applied by Gustavo Cisneros, a Venezuelan billionaire and media mogul who was introduced to Blair in 2000 by Daily Telegraph owner Conrad Black.

Sawers, Blair’s adviser, noted that Cisneros’ “sole message” for Blair “was that Chávez was a real danger to stability and free markets (and, of course, rich Venezuelans like himself)”.

A briefing document prepared by Cisneros, for instance, warned that “Chavez will likely react” to oil prices dropping “by lashing out at the private sector”.

Sawers viewed Cisneros with suspicion but broadly agreed that Chávez was objectionable. There was, he wrote, “a chance that the picture [with Chávez] at the front door [of Downing Street] would come back to haunt us”.

He continued: “This is one of the World’s tyrants whose hand I won’t have to shake”.

The coup against Chávez

A coup against Chávez broke out in April 2002, orchestrated by dissident military and political figures with support from Washington.

Pedro Carmona, an economist who was unconstitutionally appointed Venezuela’s president, quickly set about dismantling the country’s democracy and reversing Chávez’s oil reforms.

He happened to be in the offices of Cisneros, the mega mogul who had taken the opportunity to “pour poison” into Blair’s ears about Chávez, when the coup broke out.

The declassified files show how Britain quietly hoped the Carmona regime would be more accommodating to foreign interests while noting the unconstitutional nature of the coup.

“The Cabinet is strong on experience and business” and “hopefully its management capability will be much higher”, wrote the British embassy in Caracas.

The embassy was also informed by UK business leaders in Venezuela that “their operations should be back to normal by 15 April”, while Shell’s “production of oil was unaffected”.

At the same time, however, the Foreign Office was disturbed by the fact that “no one” had “ever elected” the Carmona regime.

“Venezuela may or may not have wanted to get rid of Chavez, but not necessarily to lose the other parts of their democratic system”, one official wrote. “The right-wing businessmen seem to have shot themselves in the foot”.

Notably, the UK government seemed to have some knowledge of Washington’s role in the events.

On 14 April, with Chávez imprisoned in a military barracks, the British embassy in Caracas cabled to London that the US ambassador had been spending “some hours in the Presidential Palace”.

“Please protect [the information]”, they instructed.

The opposition

The coup was short-lived.

Chávez was reinstated within 47 hours following a wave of popular mobilisations across Caracas.

With Chávez back at the helm, the Foreign Office quietly hoped that “the events of the last few days” would be seen as “a serious warning to change his ways”.

But the situation remained tense, with UK foreign secretary Jack Straw noting in July 2002 that Chávez’s position “remain[ed] shaky”.

The political opposition in Venezuela was seen by Whitehall as particularly intransigent, with Straw declaring that Chávez looks “positively resplendent compared with [them]”.

The Venezuelan opposition, Straw continued, “appear to be united, indeed motivated, by sheer indignation that someone like Chávez (not one of them and above all not white) should be in charge and have such a popular power base”.

An official in Britain’s embassy in Caracas similarly noted in 2002 that the Venezuela opposition “looks like a train that tried to breach a wall on one track in April and are now seeking to do the same on a slightly different track and at a slightly different angle”.

They added: “The opposition’s self-delusion is growing worse by the day: they claim alternately they are living in either a fascist or communist dictatorship”.

One of the key opposition figures in this period was María Corina Machado, with whom the UK government is currently in talks amid a renewed regime change campaign in Venezuela.

Source: Declassified UK

The impact the Rodríguez administration could have on the Venezuelan oil industry, even under the new Hydrocarbons Law, would be unsustainable and limited in scope. Structural weakness surrounding the Delcy government and the National Assembly’s lack of legitimacy, commitment to the rule of law, and popular support will restrain the reach of her reforms. Nevertheless, the law will test the willingness of the private sector to run both upstream and downstream operations. These measures could deliver a limited economic boost, that despite American supervision, will be weaponized politically by window-dressing the regime’s legitimacy and stalling further political and economic reforms. It’s precisely this flawed political and legal foundation that undermines the sustainability of the economic gains that the new law could provide.

For Venezuela and PDVSA to reclaim relevance in the international oil market what is required are not incremental improvements but a comprehensive overhaul of the industry, the company, and the constitutional framework that ties them together. The reforms must prioritize transparency, accountability, and insulating the industry and PDVSA from political pressures under strong political coverage that provides long term stability. These measures are something an interim administration, independent of who is in charge, will be unable to provide. Only then would international companies and capitals commit to the long term projects needed.

Once the country finds its political footing under a popularly elected and legitimate government can longlasting and durable reform take place. At this point multiple options may surface. There could be a scenario where we see PDVSA take a back seat while the country creates a competitive fiscal system prioritizing royalty collections while up and downstream operations are run by private enterprises. Remaining PDVSA assets and JV operations would be divested gradually as production capacity is recovered in the hands of private enterprises. However, revitalizing PDVSA as a competitive oil company should remain as a national strategic objective. Venezuelans would greatly benefit from building a company able to compete in and outside of the Venezuelan market.

However, the only way to relaunch PDVSA as a relevant actor in the international market is by allowing it to enter the 21st century oil dynamics and embracing a partial privatization via a minority share offering in international equity markets. Beyond the much needed capital that would be raised in the initial and consequent secondary offerings, plus the potential to tap debt markets along the way, going public will create an additional moat and isolate the company some steps from further political interference. A publicly traded PDVSA would not only need to answer to the government but to energy analysts, independent shareholders, and international compliance and regulatory frameworks alike. It will be the pressure generated by the external scrutiny that will enable PDVSA to be scaled up back into international relevance. Given the precarious financial and operational standing of the holding, a partial privatization is not feasible on day one or two of a political transition and economic recovery phase. But it is a question that will become relevant once the objective becomes long sustainable growth.

PDVSA would need to cut all non-essential personnel and assets, streamlining its operations. Every dollar spent should be evaluated under a return-on-capital framework, making financial discipline central to strategic planning.

The privatization of PDVSA has been a taboo for Venezuelan society despite serious attempts in late 1990s to execute such an operation. However, the devastation that the industry suffered under chavista mismanagement provides a clean slate opportunity to relaunch PDVSA and the oil industry under a modern governance framework. For too long the Venezuelan oil industry has been treated as the cash cow of whoever seats in Miraflores. Historically, this led to the centralization of political and economic power which hindered the development of democratic institutions and left the nation at the will of the administration’s oil revenue distribution policy. Taking control of PDVSA not only meant controlling the oil industry but the state itself. Reforms should aim to break the petro-state monopoly over oil revenue and to make PDVSA part of a dynamic national industry where other participants are allowed to play.

There are multiple precedents to back this move. Lessons from the partial privatizations of Chinese SINOPEC and Norwegian Statoil from the early 2000s could be drawn to prove that these operations are possible under different political systems. A PDVSA offering would be exceptionally complex, but in order to even start considering it there are three basic fundamentals that need to align.

First, the move would need overwhelming support from civil society to sustain the necessary political will. While that looks like a concrete goal in María Corina Machado’s energy proposals, the possibility seems remote under an interim Delcy government that still needs to appease other factions within the ruling coalition. In addition, chavismo’s current leader has not adhered to international transparency standards following her 2020 appointment as acting Minister of Economy and Finance—a role that earned her the title of Venezuela’s economic vice president before taking control of the national oil industry. Her tenure overlapped with the loss of an estimated $21 billion in oil payments, a scandal that ultimately led to the arrest and scapegoating of former Oil Minister Tareck El Aissami.

Second, Petróleos de Venezuela needs a robust rule-of-law framework that can deliver credible guarantees to investors The current interim president is unlikely to provide such assurances, given the deep mistrust surrounding Venezuela’s public institutions—many of which she does not fully control. As Juan Guillermo Blanco points out, her posture may swing from alignment with Washington on this occasion to an anti-imperialist rupture if the circumstances allow it.

Shifting to global best practices

PDVSA cannot move forward without the goodwill of the market. Francisco Monaldi has repeatedly stated that the main risks of Venezuelan oil are above ground. Beyond the politics, sanctions, and the legal framework, PDVSA needs to get its house in order to regain market credibility. For starters, the holding needs to address its debt issue—estimated at $34.5b—through an agreement where debtholders walk away feeling it was a fair deal. Without serious debt restructuring, a share offering roadshow would be impossible.

The company must also cut all non-essential ventures, subsidies, and social project funding from the nucleus. From PDVAL supermarkets to F1 teams, PDVSA bankrolled it all during chavismo. Despite how bizarre the outflows party got, these types of splurges and subsidies have been ingrained in the Venezuelan mindset and will be hard to get rid of. Such measures would represent a comprehensive detachment from century-old beliefs in the magical powers of the Venezuelan petro-state.

Furthermore, PDVSA would need to cut all non-essential personnel and assets, streamlining its operations. Every dollar spent should be evaluated under a return-on-capital framework, making financial discipline central to strategic planning. In addition, investors and banking partners must be able to track every dollar. Auditable records are not only essential for building reliable financial projections but also necessary for protecting stakeholders from anticorruption liability. This underscores the need for a new framework of transparent, efficient contract allocation and fully auditable accounting trails, ensuring that financial statements can withstand market scrutiny and compliance verification.

Making an example out of Petróleos de Venezuela would help generate a spillover effect that could contribute to more transparency, financial discipline, and compliance across the domestic market.

Figures such as the “productive participation contracts” (CPPs) or joint ventures that currently dominate private investments in the industry are compatible with this model as PDVSA should seek alliances in cases where it makes financial sense to do so. However, the secrecy under which these ventures have been working on needs to end.

Finally, PDVSA will need to bring in an independent leadership team and board with enough protection to isolate operational and financial decision-making from politics. Venezuela would be represented in the board as the majority shareholder, but would be restrained from running the day-to-day business operations and resource allocation. Studies that examine initial offerings of National Oil Companies (NOC) suggest that a substantial amount of the efficiency gains are delivered before an IPO is launched, as the company restructures itself to be introduced into the public market. PDVSA has a long way to go before we can consider this scenario. Nevertheless, aiming toward partial privatization would provide a blueprint for rebuilding PDVSA as an operationally, financially, and commercially viable company.

A share offering should consider a dual listing that includes the Caracas Stock Exchange, which is also in need of an extreme makeover (that’s part of a different discussion, however). The overhaul needed is not only about getting barrels out of the ground, but about including the company in the wider economy and making it subject to the highest managerial and corporate governance standards. Making an example out of Petróleos de Venezuela would help generate a spillover effect that could contribute to more transparency, financial discipline, and compliance across the domestic market. Ultimately, this would constrain the government’s ability to overreach into the private sector.

Whichever path is chosen for the future of PDVSA and the Venezuelan oil industry, it should be preceded by an inclusive debate that considers implications beyond the industry itself and sets the country on a sustainable growth path. This debate must happen in public, in conditions of full political and economic freedom, free from coercion by either internal or external powers. It should be the opposite of what occurred prior to the swift approval of the new Hydrocarbons Law, when secrecy prevailed and the legislative body responsible for drafting the statute showed no significant deliberation.

The one-sided vote in the illegitimate 2025 National Assembly should not overshadow the legislature’s failure to comply with its own parliamentary rules during the bill’s passage, as purported opposition lawmakers reportedly received a copy of the draft only hours before the first debate. That episode underscores why the legal and constitutional reforms needed to break the petro-state and refound PDVSA can only follow the renewal of all institutions, including a truly multiparty, independent congress.

The end goal is simple, yet history-changing: to dismantle Miraflores’ total control and discretion over oil-industry revenues.

Caracas, February 6, 2026 (venezuelanalysis.com) – Venezuelan Acting President Delcy Rodríguez held meetings with oil executives from Repsol (Spain) and Maurel & Prom (France) on Wednesday as part of ongoing efforts to secure energy investments amid US pressure and unilateral sanctions.

“We discussed the models established in the reformed Hydrocarbon Law to strengthen production and build solid alliances toward economic growth,” Rodríguez wrote on social media.

State oil company PDVSA, represented at the meetings by its president, Héctor Obregón, touted the prospects of establishing “strategic alliances” and “win-win cooperation” with the foreign multinational corporations. 

The Rodríguez administration recently pushed a sweeping reform of Venezuela’s Hydrocarbon Law. Corporations are set to have increased control over crude extraction and exports, while the Venezuelan executive can discretionally reduce taxes and royalties and lease out oil projects in exchange for a cut of production.

Venezuelan leaders have defended the pro-business reform as a step forward to attract investment for a key industry that has been hard hit by US coercive measures, including financial sanctions and an export embargo, since 2017, as part of efforts to strangle the Venezuelan economy and bring about regime change.

Former President Hugo Chávez had overhauled oil legislation in 2001 to reestablish the state’s primacy over the sector with mandatory majority stakes in joint ventures, increased fiscal contributions, and a leading PDVSA operational role. Increased revenues financed the Bolivarian government’s aggressive social programs of the 2000s, which dramatically reduced poverty and expanded access to healthcare, housing, and education for the popular classes. 

Repsol and Maurel & Prom currently hold stakes in several oil and natural gas joint ventures in the South American country. The two firms, as well as Italy’s Eni, have operated in a stop-start fashion in recent years as a result of US sanctions. 

The European companies have consistently lobbied for increased control and benefits in their projects in the molds now established in the reformed energy legislation.

Since launching military attacks and kidnapping Venezuelan President Nicolás Maduro on January 3, the Trump administration has vowed to take control of the Venezuelan oil sector and impose favorable conditions for US corporations. Senior US officials have praised Caracas’ oil reform.

According to reports, the White House has dictated that proceeds from Venezuelan crude sales be deposited in US-run accounts in Qatar, with an initial agreement comprising 30-50 million barrels of oil that had built up in Venezuelan storage as a result of a US naval blockade since December.

On Tuesday, the US Treasury Department issued a license allowing Venezuelan imports of US diluents required to upgrade extra-heavy crude into exportable blends. On January 27, Washington issued a sanctions waiver allowing US companies to purchase and market Venezuelan crude. The exemption requires payments to be made to US-controlled accounts and bars dealings with firms from Russia, Iran, Cuba, and North Korea.

The US Treasury is additionally preparing a license to allow US companies to extract Venezuelan oil, according to Bloomberg.

The White House has urged US corporations to invest in the Venezuelan oil sector and promised favorable conditions. However, executives have expressed reservations over significant new investments. According to Reuters, US refiners have likewise not been able to absorb the sudden surge of Venezuelan heavy crude supplies, while Canadian WCS crude remains a competitive alternative. 

Vitol and Trafigura, two commodities traders picked by the White House to lift Venezuelan oil, have offered cargoes to European and Asian customers as well. India’s Reliance Industries is reportedly set to purchase 2 million barrels. In recent years, the refining giant has looked to Venezuela as a potential crude supplier but seen imports repeatedly curtailed by US threats of secondary sanctions.

US authorities have reportedly delivered US $500 million from an initial sale to Venezuelan private banks, which are offering the foreign currency in auctions that are said to prioritize private sector food and healthcare importers. Nevertheless, Venezuelan and US officials have not disclosed details about the remaining funds in a deal estimated at $1.2-2 billion.

Besides controlling crude sales, the Trump administration has also sought to impose conditions on the Venezuelan government’s spending of oil revenues. On Tuesday, US Treasury Secretary Scott Bessent told House Representatives that the flow of oil funds will be subject to outside audits. 

US Secretary of State Marco Rubio had told a Senate committee last week that US authorities would scrutinize Caracas’ public expenditure and claimed that Venezuelan leaders needed to submit a “budget request” in order to access the country’s oil proceeds.

Washington’s attempted takeover of the Venezuelan oil industry also has an expressed goal of reducing the presence of Russian and Chinese companies. On Thursday, Russian Foreign Minister Sergei Lavrov told media that the country’s enterprises are being “openly forced out” of the Caribbean nation at the behest of the US.

In mid-January, the US’ naval blockade drove away Chinese-flagged tankers on their way to Venezuela. With crude shipments partly used to offset longterm oil-for-loan agreements, Beijing has reportedly sought assurances of the repayment of debts estimated at $10-20 billion. For their part, independent Chinese refiners have moved to replace Venezuelan supplies with Iranian heavy crude.

Caracas, January 30, 2026 (venezuelanalysis.com) – The Venezuelan National Assembly has approved a sweeping reform of the country’s 2001 Hydrocarbon Law that rolls back the state’s role in the energy sector in favor of private capital.

Legislators unanimously endorsed the bill at its second discussion on Thursday, with only opposition deputy Henrique Capriles abstaining. The legislative overhaul follows years of US sanctions against the Venezuelan oil industry and a naval blockade imposed in December.

National Assembly President Jorge Rodríguez hailed the vote a “historic day” and claimed the new bill will lead oil production to “skyrocket.” 

“The reform will make the oil sector much more competitive for national and foreign corporations to extract crude,” he told reporters. “We are implementing mechanisms that have proven very successful.”

Venezuelan Acting President Delcy Rodríguez signed and enacted the law after the parliamentary session, claiming that the industry will be guided by “the best international practices” and undertake a “historic leap forward.”

Former President Hugo Chávez revamped the country’s oil legislation in 2001 and introduced further reforms in 2006 and 2007 to assert the Venezuelan state’s primacy over the industry. Policies included a mandatory stakeholding majority for state oil company PDVSA in joint ventures, PDVSA control over operations and sales, and increased royalties and income tax to 30 and 50 percent, respectively. Increased oil revenues bankrolled the Venezuelan government’s expanded social programs in the 2000s.

The text approved during Thursday’s legislative session, following meetings between Venezuelan authorities and oil executives, went further than the draft preliminarily endorsed one week earlier.

The final version of the legislation establishes 30 percent as an upper bound for royalties, with the Venezuelan government given the discretionary power to determine the rate for each project. A 33 percent extraction tax in the present law was scrapped in favor of an “integrated hydrocarbon tax” to be set by the executive with a 15 percent limit.

Similarly, the Venezuelan government can reduce income taxes for companies involved in oil activities while also granting several other fiscal exemptions. The bill cites the “need to ensure international competitiveness” as a factor to be considered when decreasing royalty and tax demands for private corporations.

The reform additionally grants operational and sales control to minority partners and private contractors. PDVSA can furthermore lease out oilfields and projects in exchange for a fixed portion of extracted crude. The new legislation likewise allows disputes to be settled by outside arbitration instances.

Thursday’s legislative reform was immediately followed by a US Treasury general license allowing US corporations to re-engage with the Venezuelan oil sector.

General License 46 (GL46) authorizes US firms to purchase and market Venezuelan crude while demanding that contracts be subjected to US jurisdiction so potential disputes are referred to US courts. The license bars transactions with companies from Russia, Iran, North Korea, or Cuba. Concerning China, it only blocks dealings with Venezuelan joint ventures with Chinese involvement.

Economist Francisco Rodríguez pointed out that the sanctions waiver does not explicitly allow for production or investment and that companies would require an additional license before signing contracts with Venezuelan authorities.

GL46 also mandates that payments to blocked agents, including PDVSA, be made to the US Foreign Government Deposit Funds or another account defined by the US Treasury Department.

Following the January 3 military strikes and kidnapping of Venezuelan President Nicolás Maduro, the Trump administration has vowed to take control of the Venezuelan oil industry by administering crude transactions. Proceeds from initial sales have been deposited in US-run bank accounts in Qatar, with a portion rerouted to Caracas for forex injections run by private banks. US Secretary of State Marco Rubio vowed that the resources will begin to be channeled to US Treasury accounts in the near future.

In a press conference on Friday, Trump said his administration is “very happy” with the actions of Venezuelan authorities and would soon invite other countries to get involved in the Caribbean nation’s oil industry. Rubio had previously argued that Caracas “deserved credit” for the oil reform that “eradicates Chávez-era restrictions on private investments.”

Despite the White House’s calls for substantial investment, Western oil corporations have expressed reservations over major projects in the Venezuelan energy sector. Chevron, the largest US company operating in the country, stated that it is looking to fund increased production with revenues from oil sales as opposed to new capital commitments.

Since 2017, Venezuela’s oil industry has been under wide-reaching US unilateral coercive measures, including financial sanctions and an export embargo, in an effort to strangle the country’s most important revenue source. The US Treasury Department has also levied and threatened secondary sanctions against third-country companies to deter involvement in the Venezuelan petroleum sector.