Venezuela's acting President Delcy Rodríguez on Thursday signed a law that opens the nation’s oil sector to privatization, reversing a tenet of the self-proclaimed socialist movement that has ruled the country for more than two decades. This came after Trump said his administration would take control of Venezuela’s oil exports and revitalize the ailing industry by luring foreign investment. Rodríguez, facing oil workers and ruling party supporters, signed the bill less than two hours after the National Assembly approved it. At the same time, the U.S. Department of Treasury officially began to ease punishing economic sanctions on Venezuelan oil, which were imposed by the first Trump administration, and expanded the ability of U.S. energy companies to operate in the South American nation. The reform will undoubtedly be her government’s signature policy as it positions the oil sector — Venezuela’s engine — to lure the foreign investment needed to revamp a long-crippled industry. Some of those companies lost investments when the ruling party enacted the existing law two decades ago to favor Venezuela’s state-run oil company, PDVSA. Additionally, the revised law modifies extraction taxes, setting a royalty cap rate of 30% and allowing the executive branch to set percentages for every project based on capital investment needs, competitiveness and other factors. The legislation promises to give private companies control over the production and sale of oil, ending the state-owned Petróleos de Venezuela SA’s monopoly over those activities as well as pricing. The law was last altered two decades ago as Maduro’s mentor and predecessor, the late Hugo Chávez, made heavy state control over the oil industry a pillar of his socialist-inspired revolution. Rodríguez’s government expects the changes to serve as assurances for major U.S. oil companies that have so far hesitated about returning to the volatile country. Sanctions imposed by successive U.S. administrations further crippled the oil industry. Rodríguez on Thursday also spoke with U.S. President Donald Trump and Secretary of State Marco Rubio, who a day earlier explained to U.S. senators in a hearing how the administration is planning to handle the sale of tens of millions of barrels of oil from Venezuela and oversee where the money flows. In tearing up the contracts that foreign companies signed in the 1990s, Chávez nationalized huge assets belonging to American and other Western firms that refused to comply, including ExxonMobil and ConocoPhillips. He noted that the current lack of oversight has led to systemic corruption and argued that these provisions can also be considered judicial guarantees. Those guarantees are among the key changes foreign investors are looking for as they weigh entering the Venezuelan market. The moves by both governments are paving the way for yet another radical geopolitical and economic shift in Venezuela. “We’re talking about the future. We are talking about the country that we are going to give to our children,” Rodríguez said of the reform. The new law also allows for independent arbitration of disputes, removing a mandate for disagreements to be settled only in Venezuelan courts, which are controlled by the ruling party. Foreign investors view the involvement of independent arbitrators as crucial to guard against future expropriation. They are still waiting to receive billions of dollars in arbitration awards.
