CARACAS – In a significant shift from Venezuela’s long-standing socialist policies, the nation’s legislature has approved the privatization of its oil industry. This decision marks a departure from the principles that have governed the country for over two decades.

The National Assembly’s move comes on the heels of a dramatic change in leadership following the abrupt ousting of former President Nicolás Maduro. This transition occurred during a U.S.-backed military intervention in Caracas, which resulted in Maduro’s removal from power.

Acting President Delcy Rodríguez, who has been steering the country since Maduro’s departure, is expected to endorse the newly approved legislation. This change aligns with U.S. President Donald Trump’s pledge to revitalize Venezuela’s struggling oil sector by attracting foreign investments, suggesting a new direction for the country’s economic strategy.

The proposed law, which has been reviewed by The Associated Press, aims to transfer control of oil production and sales to private entities and introduce independent arbitration for resolving disputes. This is designed to provide assurance to foreign investors, particularly American oil companies, which have been wary of re-engaging with Venezuela’s turbulent market.

Many of these companies had previously incurred losses when the socialist government prioritized PDVSA, the state-owned oil company, under the old energy regulations. The revised legal framework is expected to adjust extraction taxes, implementing a royalty cap rate of 30%. It also grants the executive branch the flexibility to set project-specific rates based on various economic and competitive factors.

As Venezuela navigates this transformative period, the government hopes these reforms will entice international oil giants to reinvest in the country, boosting an industry that has long been the backbone of its economy.

It also removes the mandate for disputes to be settled only in Venezuelan courts, which are controlled by the ruling party. Foreign investors have long viewed the involvement of independent courts as crucial to guard against future expropriation.

Ruling-party lawmaker Orlando Camacho, head of the assembly’s oil committee, said the reform “will change the country’s economy.”

Opposition lawmaker Antonio Ecarri urged the assembly to add transparency and accountability provisions to the law, including the creation of a website to make funding and other information public. 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.

“Let the light shine on in the oil industry,” Ecarri said.

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.

In the early years of his tenure, a massive windfall in petrodollars thanks to record-high global oil prices turned PDVSA into the main source of government revenue and the backbone of Venezuela’s economy.

Chávez’s 2006 changes to the hydrocarbons law required PDVSA to be the principal stakeholder in all major oil projects.

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. They are still waiting to receive billions of dollars in arbitration awards.

From those heady days of lavish state spending, PDVSA’s fortunes turned — along with the country’s — as oil prices dropped and government mismanagement eroded profits and hurt production, first under Chávez, then Maduro.

The nation home to the world’s biggest proven crude reserves underwent a dire economic crisis that drove over 7 million Venezuelans to flee since 2014. Sanctions imposed by successive U.S. administrations further crippled the oil industry.

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