In the history of oil, control has never resided solely beneath the ground, but in the rules that determine who decides, who collects, and under what authority.
For over a century, the political history of Venezuela has revolved around the same question: who controls the oil and under what rules? In 2026, this question arises again with renewed intensity, but in a radically different context. The reform of the Hydrocarbons Law implemented by Delcy Rodríguez’s interim government, along with the General License 46 from the U.S. Department of Treasury and the financial custody mechanism known as Foreign Government Deposit Funds (FGDF), has reopened the Venezuelan oil sector. But who is in control?
To understand what’s at stake, it’s essential to view the present through the lens of two historical moments that shaped the country’s trajectory: the concessions granted during Juan Vicente Gómez’s dictatorship in the early 20th century and the oil nationalization of 1976. The comparison reveals a troubling pattern: Venezuela is producing oil again, but under a legal framework that combines openness, centralization of power, and a unique form of external supervision.
From Parliamentary Control to Administrative Discretion
The crux of the 2026 reform lies not in the rhetoric of modernization, but in a fundamental institutional transformation: the elimination of parliamentary control over oil contracts, effectively deactivating the strategic nature of oil as an instrument of sovereignty and national development. For decades, this control functioned as an imperfect yet relevant public filter. Requiring contracts to go through Parliament imposed political costs, maintained records, and offered a minimum level of traceability in a country with weak judicial institutions.
The new law eliminates this check and centralizes all contractual power in the hands of the Executive via the Ministry of Hydrocarbons. There are no mandatory external audits, nor full publication of contracts, annexes, or addendums, and no independent regulator. The outcome is a process that’s faster, but also more opaque. The oil contract shifts from being a public political act to a closed administrative one, hidden from public scrutiny.
In governance terms, this means that the same ministry designs the contract, approves the operator, defines fiscal incentives, can modify terms, and supervises compliance. This breaks fundamental principles of separation between regulator, contractor, and supervisor. The bet is political: attract investment by disciplining the Executive itself due to the need for results: the increase of oil production. The risk is structural: legal unpredictability post-factum.
Private Operations and Cash Control
The reform also allows private companies (IOCs) not just to technically operate the fields, but also to market the crude oil directly. In theory, this could be a necessary modernization in an industry devastated by the administrations of Chávez and Maduro. In practice, it shifts the center of power toward those who control the cash flow.
In the oil business, sovereignty resides not only in the formal ownership of the subsoil but also in controlling the so-called money pipe: who sells, when they collect, and how the money flows. If the private operator manages marketing and later transfers royalties or taxes previously agreed upon to the State, the State ceases to control the primary flow of extraction and sale, and instead becomes dependent on what it receives afterward.
The legal ownership remains on paper; effective power shifts to those managing the daily cash. Without external audits or robust transparency rules, this space becomes an opaque terrain of permanent negotiation.
Fiscal Flexibility: Quick Investment, Weak Rules
Another central axis of the reform executed by Delcy Rodríguez is fiscal flexibility. Royalties and taxes can be reduced at the Executive’s discretion, project by project. This might attract short-term investment—mature fields, secondary recovery—but does not constitute a stable fiscal regime. It resembles a negotiated exemption system on a case-by-case basis.
The difference is not merely semantic. A modern fiscal regime is based on clear, predictable formulas. Here, the investor does not plan based on rules, but rather on business relationships. Additionally, the appearance of a new, yet-to-be-regulated hydrocarbon tax introduces further uncertainty: it’s impossible to accurately model a project when part of the tax burden is “pending definition.”
Comparative evidence is illustrative. Between 1973 and 1981, Nigeria operated under contractual and fiscal arrangements marked by discretionary reliefs, recurring renegotiations, and a high dependence on political intermediation, which eroded the sector’s institutional predictability. The result was intermittent investment, high corruption, and a rent that did not translate into sustained well-being. After 2003, Iraq, under heavily U.S.-supervised governments, sought contractual flexibility to attract capital in a fragile state context: production increased, but institutional support did not follow. Venezuela today resembles more these models than a modern fiscal system: fragile rules, high discretion, and concentrated power.
Ambiguous Arbitration, Real Risk
The law introduces arbitration as a dispute resolution mechanism, but without clearly specifying whether it will be national or international, nor under which rules. For serious investors, institutionalized international arbitration—such as that from the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), or International Centre for Settlement of Investment Disputes (ICSID, World Bank)—is a basic security in countries with politicized justice. An ad hoc arbitration negotiated with the same ministry that is part of the dispute does not reduce risk; it increases it.
Here, the word “arbitration” makes the headline better, but the fine print defines whether capital arrives structurally or merely as a short-term gamble.
Reserves Do Not Equal Well-being
The interim government’s rhetoric insists that the reform will convert reserves into well-being. The oil history suggests caution. Reserves are not consumable. To transform them into well-being requires sustained investment, logistics, diluents, electricity, security, talent, and contractual stability. The reform might unblock contracts; it doesn’t guarantee governance.
The main bottleneck today is not capital—there is capital willing to enter if there’s profitability—nor even operational capacity, which is deteriorated but recoverable. It’s trust. Without credible rules and protection of cash flow, capital will enter slowly, at a high cost, and with a short horizon. First trust; then capital; afterwards operation.
Gómez, Delcy, and 21st Century Tutelage
The historical comparison is revealing. Under Juan Vicente Gómez, Venezuelan oil developed through broad concessions to foreign companies. The State ceded operational and legal control in exchange for rent and stability. In 1976, nationalization reversed this scheme: the State regained total control of the industry and revenue.
The 2026 model introduces a different logic. The State maintains formal ownership of the resource but transfers operational and contractual control, and, through the FGDF, admits external custody of the surplus. This is neither the classic concession of the early 20th century nor the rentist sovereignty of the 1970s. It’s a hybrid arrangement: legal sovereignty accompanied by effective functional dependency.
The General License 46 from OFAC allows Venezuelan oil back into the U.S. market, but under strict conditions: contracts subject to U.S. law, exclusion of certain geopolitical actors, and payments channeled to accounts under U.S. Treasury control. Oil flows; the cash waits.
Political Strength or Future Fracture?
In the short term, the reform strengthens the Executive. It provides speed in decision-making, room for maneuver, and a narrative of reactivation. But it also causes fractures: within Chavismo-Madurismo, between those who depend on controlling rent and those betting on normalizing with private sectors; and in society, where an opening without transparency feeds the narrative of “surrendering sovereignty.”
The Venezuelan oil history is relentless with shortcuts. Without public controls, independent audits, and stable rules, investment may come. Well-being, however, is not guaranteed.
Conclusion
Venezuela is back to producing and exporting. But the crucial question isn’t how many barrels, but who commands them. In oil, whoever collects first holds power. And today, amidst the Executive’s discretion and the external custody of the surplus, real control of the resource has definitively slipped beyond the reach of the Venezuelan citizens.
The country remains the legal owner of the oil on paper. But it no longer fully decides about it. This is the dilemma of the new cycle of Venezuelan oil. And its outcome, as always, will depend less on crude and more on the rules.
@antdelacruz_
Executive Director of Inter América Trends