Venezuela’s interim government has introduced long-awaited oil regulations, marking a major policy shift that brings an end to the decades-long dominance of national oil company Petróleos de Venezuela SA, or PDVSA, over the nation’s most important industry. Published in the Official Gazette, the 29-page regulatory framework establishes the operating rules for private companies across the full oil value chain, covering activities from the wellhead to the fuel pump.
The document also defines fiscal terms, including a range of taxes designed to reflect the risk profile of different assets, from brownfield deposits to offshore operations.
The newly issued oil regulations represent the first comprehensive regulatory framework for Venezuela’s oil industry since 1943. Notably, the document contains no reference to PDVSA, the state-owned company that was once regarded as a successful national oil producer before declining after years of mismanagement and corruption.
Commenting on the policy change, Samantha Gross, director of energy security at The Brookings Institution, said, “I think that opening up the market is a good thing, if you think about where PDVSA is, they are cash strapped, they haven’t been functioning well for years.”
Private Sector Role Expands Beyond Oil Production
Although PDVSA had already transferred managerial control over oil production to Chevron Corp. and other private-sector companies beginning in 2022, the latest oil regulations significantly broaden private participation by extending market access to oil refining, marketing and distribution. The regulations are directly linked to the landmark reform of Venezuela’s oil law approved in January under the U.S.-backed interim administration led by Acting President Delcy Rodríguez, who has been overseeing a series of major economic reforms.
The opening of the oil industry is intended to attract much-needed investment as the US gradually unwinds sanctions. The government considers this objective even more pressing following last month’s catastrophic earthquakes. Despite the broader market access, Gross noted that opening the sector is only the initial stage of the process.
She explained that Venezuela’s refineries have suffered years of neglect and will require extensive restoration before they can operate efficiently again.
Government Highlights Development Goals
During a signing ceremony broadcast on state television, Rodríguez described the new oil regulations as a historic step aimed at using reserves for the country’s development. Alongside the main regulatory package, the government also issued a separate resolution this week establishing the rules governing the determination, declaration and payment of taxes and royalties applicable to companies involved in oil upgrading, refining, industrialization, marketing and specialized oil field services.
