Venezuela unveils draft oil rules to guide foreign investment push, economy expands

Oil output is steadily increasing as Caracas-Washington ties improve

WHAT: Venezuela has begun circulating draft regulations linked to its newly approved hydrocarbons law

WHY: The country is keen to attract foreign investment

WHAT NEXT: Venezuela has the geology and technical capacity to raise oil output to 4mn bpd

Venezuela has begun circulating draft regulations linked to its newly approved hydrocarbons law, providing fresh details on how private companies would operate in the country’s oil and gas sector as Caracas moves to loosen decades of state control, Bloomberg reported.

The 63-page document outlines technical, operational, fiscal and oversight requirements for firms participating in Venezuelan energy projects, including refining, upgrading and crude trading activities that were historically dominated by state-owned Petróleos de Venezuela (PDVSA).

The draft also repeals Venezuela’s 1943 oil law and regulations dating back to 1969, representing one of the most significant restructurings of the sector’s legal framework in decades.

At the same time, PDVSA has started circulating proposed contract models to energy companies interested in joining the country’s plans to expand oil production.

The regulations and contract templates had been widely anticipated by the industry since the hydrocarbons law was enacted in January, shortly after Nicolás Maduro was removed from power and Delcy Rodríguez assumed the interim presidency.

The measures are viewed as defining the extent of Venezuela’s opening to foreign capital after years of tight state control over the industry.

Energy specialist Elisabeth Eljuri said the proposed rules introduce several “novel topics” for Venezuela’s oil sector, including domestic utilisation requirements, unitisation rules, greenhouse gas considerations, monitoring obligations and provisions governing the return of operational data to the state.

Eljuri also said the draft appears to require enhanced and secondary oil recovery methods across all projects, signalling a stronger emphasis on maintaining long-term production capacity.

Datanálisis: Venezuelan economy to expand after early-year slowdown

Venezuela retains the capacity to post moderate economic growth this year despite weaker oil activity at the start of 2026, according to economist Luis Vicente León, who said the effects of the slowdown have yet to significantly hit day-to-day commerce, Últimas Noticias reported.

León, president of research firm Datanálisis, said through social media posts that the first quarter unfolded broadly in line with expectations, with January and February showing lower oil production levels than the same period a year earlier. He added that stronger activity in March helped reverse the earlier weakness and lifted overall quarterly performance.

The economist cautioned that the broader impact of oil revenue flows would take time to materialise because of collection cycles within the energy industry and delays linked to treasury accounts where funds are deposited. “The real impact will depend on how those resources return to the country through the new US control system,” León said.

He noted that authorities in Washington increasingly recognise the importance of preserving economic stability in Venezuela as part of their broader policy approach toward the country.

León said further progress would depend on reforms to the foreign-exchange system, particularly measures aimed at increasing flexibility in the domestic use of foreign currency. He called for broader liquidity and planning mechanisms for dollar transactions, including allowing foreign-currency accounts to be used more freely for local payments and transfers.

According to León, wider access to foreign currency at more competitive exchange rates would help stimulate domestic consumption and reduce dependence on digital payment instruments that can only be used abroad.

Datanálisis maintained its projection for Venezuela’s economy to grow between 10% and 12% this year, forecasting a stronger second half if authorities narrow the exchange-rate gap that continues to distort prices and weigh on consumer confidence.

Venezuela could sustain 4mn barrels a day for decades

Venezuela possesses the geological and technical capacity to raise oil production to as much as 4mn barrels per day (bpd), although reaching those levels would require years of infrastructure rebuilding and operational recovery, according to investment banker José Gonzales of GCG advisors, Últimas Noticias reported.

Gonzales argued that financing should not be viewed as the sector’s principal constraint. “The money will come; there is money in the world,” he said, urging that the country’s oil prospects be assessed from an engineering and geological perspective rather than a purely financial one.

He compared Venezuela’s production potential with Saudi Arabia, noting that although the Gulf producer has the technical capacity to pump 13mn bpd, its historical output has remained below 11mn barrels and currently stands at about 9.2mn.

The banker said Venezuela’s oil industry continues to face the natural decline rates common to mature fields, with wells losing between 10% and 14% of output annually because of depletion. That trend, he explained, requires production infrastructure to be effectively renewed every decade in order to sustain extraction levels.

Despite those challenges, Gonzales said Venezuela’s reserves could support stable production of around 4mn bpd over the next 30 years if investment and rehabilitation efforts continue.

He pointed to the industry’s recovery from a low point of roughly 335,000 bpd to current production of about 1.1mn barrels, describing the present operational phase as focused on “recovery, repair, and modernisation.” According to engineers consulted by Gonzales, the system currently relies on between 12,000 and 14,000 active wells.

The banker projected that Venezuela could close this year producing between 1.3mn and 1.4mn bpd, before potentially reaching from 1.7mn to 2mn barrels next year. 

He cautioned, however, that expanding to 3mn bpd would be considerably more difficult because of deteriorated equipment and could require an additional two to three years. Reaching 4mn barrels a day, he added, may take between seven and 10 years.

Venezuela oil output extends recovery

Venezuela’s crude production rose for a third straight month in April, underscoring a rebound in the country’s energy sector as closer ties with the United States encourage fresh investment and policy changes aimed at expanding output, EFE reported.

According to figures compiled in a report published by OPEC, the country pumped an average of 1.13mn bpd in April, up from 1.09mn in March.

Production has climbed nearly 23% since January, when output stood at 924,000 bpd following the capture of Maduro and the targeting of sanctioned oil tankers linked to Venezuela.

Data from the US International Trade Commission showed Venezuelan exports to the US totalled $1.87bn during the first quarter, with crude oil accounting for 96.53% of shipments.

The Chavista-led National Assembly has since approved reforms to the hydrocarbons law promoted by Rodríguez, seeking to attract foreign capital into the oil industry. Analysts viewed the move as a significant departure from the state-heavy energy policies established under Hugo Chávez.

The sector’s recovery has unfolded alongside growing labour unrest. Venezuelan workers and unions have staged protests throughout the year over wages, even after the government increased bonuses to $240 instead of raising the monthly minimum salary.

Venezuela produced an average of 1.08mn bpd in 2025, extending a five-year recovery from the 636,000 barrels recorded in 2021 and surpassing the 2019 average, according to official data. A United Nations projection published in April estimated the country’s oil export revenue could exceed $22bn in 2026, more than 50% above last year’s level.