Venezuela Overhauls Oil Law Following US Capture of Maduro

The Venezuelan National Assembly has passed the first reading of a comprehensive reform to the Organic Hydrocarbons Law, marking the first major overhaul of the sector since 2007. The legislation seeks to dismantle the nationalization model established by Hugo Chavez, allowing private companies to independently operate fields, commercialize crude, and utilize international arbitration for disputes. Key incentives include reducing royalties and extraction taxes from 30 percent to as low as 15 percent to attract foreign capital.

This legislative shift follows a January 3 U.S. military incursion, involving airstrikes in Caracas and a raid on Fuerte Tiuna, which resulted in the capture of former President Nicolas Maduro. Under pressure from Donald Trump, interim President Delcy Rodríguez is moving to integrate U.S. energy firms into the economy. The U.S. government has asserted control over Venezuelan crude sales, resulting in an initial $300 million transfer to the interim government as part of a broader energy agreement.

To revive a sector depleted by sanctions and underinvestment, PDVSA CEO Hector Obregon has set a target to grow production by at least 18 percent in 2026. The Trump administration is pursuing a "go-fast" approach, negotiating with Chevron Corp. and service providers like Halliburton and SLB to repair outdated equipment. Chevron aims to increase production from its joint ventures by 50 percent within two years. Opposition leaders, including Henrique Capriles, have criticized the process, alleging a lack of transparency and the exclusion of opposition lawmakers from the legislative debate.