Venezuela’s oil and gas sector — long defined by its vast reserves and heavy state involvement — is in the global spotlight. Venezuela holds the world’s largest oil reserves, and one of the world’s largest non-associated natural gas reserves.
Based on PDVSA data and what is reported to OPEC, the current oil production average fluctuates monthly between approximately 934,000 and 1.1 million barrels per day, even though only a few new wells were drilled in 2025. This demonstrates the country’s substantial installed capacity, despite considerable deterioration in the hydrocarbons infrastructure.
However, this figure is still far from the 2.4 million barrels per day produced in 2016, before the sharp decline in industry activity began. Venezuela’s oil and gas sector requires significant investment due to years of infrastructure decline, reduced technical capacity and underfunding.
On January 7, 2026, following President Trump’s announcement of an energy deal to acquire Venezuelan oil, the US Department of Energy issued a fact sheet regarding the marketing and sale of Venezuelan crude oil and oil products. The fact sheet includes these sanctions-related announcements:
- “The United States is selectively rolling back sanctions to enable the transport and sale of Venezuelan crude and oil products to global markets.”
- “As part of the significant modernization, expansion, and upgrading required, the US will authorize the import of select oil field equipment, parts, and services to immediately offset decades of production decline and drive near-term growth. This will involve technology, expertise, and investment from American and other international energy partners.”
Against this backdrop, the country’s hydrocarbon regulatory regime (and in particular, the laws around key investor business models such as O&G licences, joint ventures (JVs), partnerships alliances and production sharing arrangements) is now undergoing scrutiny.
This article provides a brief overview of the existing regulatory framework governing the key business models, examines recent developments and considers additional critical reforms that are required in this space from the perspective of investors.
The two main pieces of legislation that govern the hydrocarbons industry are the Organic Law on Hydrocarbons of 2006 (the “Oil Law”) and the Organic Law on Gaseous Hydrocarbons of 2001 (the “Gas Law”).
At present, private companies are permitted to be minority shareholders only in projects involving upstream oil and associated gas — that is, gas that is found alongside crude oil within the same reservoir. The Oil Law requires that in order to participate in any upstream oil and gas project private entities must form in Venezuela an incorporated joint venture (mixed companies or “empresas mixtas”) in which the state, through the Venezuelan Petroleum Corporation (a wholly-owned subsidiary of Petróleos de Venezuela, S.A. (PDVSA), which is Venezuela’s state‑owned oil and gas company) must be the majority and controlling shareholder.
Under Venezuelan law, only the JV entity is permitted to operate the project, as “primary” oil activities such as upstream exploration and development are reserved exclusively to the state, either directly or through a JV where the state holds a majority stake. The Gas Law, on the other hand, allows private entities to operate non-associated gas fields (i.e., natural gas that is produced from reservoirs that do not contain crude oil) under a license granted by the Hydrocarbon Ministry.
In recent years, PDVSA's financial issues have led the Venezuelan government to ease some restrictions. For example, PDVSA has reached agreements with some minority JV shareholders, allowing them to invest in higher production to offtake crude or upgraded oil as debt repayment, manage contracting and procurement, and hold key management roles.
Furthermore, under the Constitutional Anti-Blockade Law of 2020 (the “Anti Blockade Law”), PDVSA has sought to attract new private investment to increase production in some fields under new types of contracts, including Productive Participation Contracts (Contratos de Participación Productiva (“CPP”). CPPs are akin to production sharing agreements, whereby private investors assume the rights to operate the fields and invest in increasing their production in exchange for a portion of the incremental production.
The above examples demonstrate PDVSA and regulatory authorities' growing acceptance of private involvement in upstream oil operations. This trend is expected to continue, accompanied by further substantial legal reforms within the broader regulatory framework that facilitates investment in the oil and gas sector.
On 15 January 2026, an initial step toward such reforms was taken when Venezuela’s acting president, Delcy Rodríguez, presented a partial amendment to the Organic Hydrocarbons Law before the National Assembly. The proposal aims to attract foreign investment, provide legal protection for mechanisms established under the Anti Blockade Law and revitalize the oil and gas industry.
Although specific technical details of the proposed amendments have not been disclosed, some private sources suggest that the reform will also regulate foreign investments in the sector in a manner consistent with the contractual arrangements previously established with foreign oil and gas companies. What has been disclosed is that the reform is expected to (among others):
- incorporate the mechanisms of the Anti Blockade Law into the Oil Law and the Gas Law, making them permanent features of the hydrocarbons sector’s legal framework
- provide legal certainty to agreements already operating under the Anto Blockade Law models
- regulate financial mechanisms enabling private companies to access revenues from oil sales by placing the funds in a dedicated account
- introduce royalty reductions, thereby decreasing the government’s share to incentivize investment and enhancing Venezuela’s competitiveness in global markets
- enable further foreign investment into the hydrocarbons sector
- expand the participation of private and foreign capital across the oil and gas value chain, without formally altering state ownership of natural resources
These proposed amendments, combined with existing investment protection treaties and treaties to avoid double taxation, are expected to provide foreign investors with additional guarantees to safeguard their interests in Venezuela.
Although precise information is not yet released, it is evident that a clear and stable legal framework plays a vital role in drawing investment. In addition to what has been disclosed to date, the forthcoming reform should thoroughly cover critical matters, including protecting against expropriation or similar actions, assuring free movement of capital, and creating impartial venues for resolving disputes.
We will share additional updates as soon as further details are available.