The Venezuelan government projects oil investments to grow by 55% in 2026 as it reformulates the Hydrocarbons Law to open up the sector to private investments, marking a potential turning point for Venezuelan oil investment after years of decline and state dominance.
Acting President Delcy Rodríguez said Venezuela expects “some $1.4 billion in investments” in its oil sector for the year, compared to $900 million invested last year. This is part of a strategy to grow hydrocarbon production and court private investors.
“We have faced difficulties given the aggression … But we are reactivating projects. Venezuela produces what it needs to,” Rodríguez said.
Rodríguez’s administration has taken steps in recent months to open Venezuela’s oil industry to private domestic and foreign firms, framing the legal overhaul as essential to restoring confidence and unlocking new Venezuelan oil investment flows.
Long one of the Organization of Petroleum Exporting Countries’ largest oil producers by reserves, Venezuela’s oil production fell steadily for years as Presidents Hugo Chávez and Nicolás Maduro increased state control of the industry and squeezed out independent operators.
OPEC member Venezuela pumps less than 1 million barrels per day of crude oil this year after hitting highs of more than 3 million barrels per day in the mid-2000s. To increase output, Venezuela will have to reverse years of economic stagnation and policies that disincentivized foreign investment.
Rodríguez said that Venezuela would grow oil production via reforming the Hydrocarbons Law to allow contracts based on productive participation with private firms, both domestic and foreign, a mechanism officials see as central to rebuilding Venezuelan oil investment momentum.
Venezuela’s Hydrocarbons Reform: What to Know
The National Assembly-approved Hydrocarbons Law reform bill is meant to make Venezuela attractive to foreign and private investment while maintaining state control of the sector.
It passed its first debate and is awaiting ratification later this month or in early May. According to the law, companies operating in Venezuela would be able to:
Operate Independently
Contractors operating in Venezuela would gain autonomy to operate as they see fit instead of going through cumbersome — and sometimes politically motivated — processes overseen by state oil firm Petróleos de Venezuela, S.A. (PDVSA).
Focus on Production
Companies would focus on producing oil rather than obtaining rights to operate on the territory. Results are handed over to the state.
Commercial autonomy
Legal protections for companies would allow firms some certainty that their investments would not be stripped away by changes in Venezuelan policy. It would also allow companies to seek international arbitration for contracts, a point that was forbidden under Venezuela’s previous, more rigid hydrocarbons policy.
Become Part of the Global Market
The law also permits contractors to sell oil on the global market, something Venezuela previously only allowed through PDVSA.
The reform would guarantee productive participation contracts (CPPs), which were initially issued via executive order under former President Maduro’s Anti-Blockade Law in 2020 to bypass U.S. sanctions.
Rodríguez touted productive participation contracts as a way to attract investors to help Venezuela both increase output and sell oil abroad to help stabilize the domestic economy and currency.
“We need capital to develop productive participation contracts … we have signed contracts for the supply of dollars that will allow us to guarantee workers’ salaries,” Rodríguez said.
Chevron has said it would welcome deeper ties with Venezuela’s oil industry, while other firms could provide technology that can increase output and competitiveness. In other words, reforms to Venezuela’s Hydrocarbons Law are designed to open the country up for investment.
United States Factor
Oil prices surged this week after U.S. and Venezuelan officials announced a bilateral deal for the sale of Venezuelan oil to the United States, along with discussions about allowing Chevron to invest in oil projects in Venezuela, developments that could significantly accelerate Venezuelan oil investment if sanctions relief proves durable.
Bloomberg reported recently that U.S. officials were willing to involve American energy companies in Venezuela’s comeback story.
Washington’s approval of Venezuelan oil exports is the carrot that Venezuelan officials are hoping will unlock billions in much-needed investment in the country. However, lawmakers and energy analysts have warned that companies will be wary of sending capital to Venezuela without clear rules that protect their investment. The reforms in the Hydrocarbons Law would go some way to offering that reassurance.
Oil Investment Still Faces Hurdles
Opposition lawmakers, energy analysts, and legal experts have criticized the accelerated timeline of Venezuela’s Hydrocarbons Law reform. They argue that the government is pushing through legislation that may contradict the Venezuelan constitution.
The speed of the bill’s approval could open it up to legal challenges that stall reforms needed to attract capital. Chevron and other companies have the technical ability and personnel to help Venezuela jump-start oil output, but may be deterred if capital is at risk of nationalization.
Rebuilding Venezuela’s oil sector is also expected to take significant investment, perhaps tens of billions of dollars. It will also take time to reverse damage from years of underinvestment, limited technology, and a shortage of experienced personnel to restart wells, expand capacity, and restore long-term investor confidence.