By Professor Carlos Lusverti, Andrés Bello Catholic University, Venezuela

On 29 January 2026, the National Assembly of Venezuela amended the Organic Law on Hydrocarbons, marking a radical shift in Venezuelan policy, historically characterised by the state’s exclusive control over the oil industry. This follows the US Government’s intervention on 3 January 2026, which culminated in the arrest of President Nicolás Maduro and Cilia Flores and subsequent announcements regarding the opening of the oil industry to private companies, including US firms.

The reform promises to “modernise” the legal framework for the oil industry by offering full participation to private companies, fiscal flexibility and international arbitration to strengthen legal certainty. However, it ignores the structural weakness of the rule of law, as well as the impacts of the human rights crisis the country has faced since 2014.

Venezuela’s history of oil and crisis

Since 1975, the Venezuelan oil industry – the main driver of the national economy – has operated as a state-owned monopoly, with some private sector participation until 2006, when legislation was amended to bring the entire industry under state control. This included the early and unilateral termination of agreements with transnational companies.

The progressive reduction in the oil industry’s operational capacity due to political turmoil, corruption and the deterioration of infrastructure, along with the global drop in oil prices beginning in 2014, partly explain the causes of the human rights crisis that has led to an exodus of 8 million Venezuelans over the past decade.

Key provisions of the new hydrocarbons law

The main changes in the law are:

• It establishes “Productive Participation Contracts” under which the “operating company assumes full management at its own cost and risk; the state does not assume any debt; and the company’s compensation is a percentage share of the audited volumes.” This effectively eliminates the state monopoly, allowing fully private companies to engage in the “exploration, extraction, collection, transportation, storage, processing, upgrading, refining, industrialisation, marketing, conservation, and comprehensive utilisation of hydrocarbons.”
• It authorises the Executive Branch to reduce established royalties for projects requiring large investments.
• It increases “legal guarantees for investment” by incorporating the possibility of resorting to independent mediation and arbitration mechanisms.

Although a declaration of principles focused on the energy transition was included, the law does not ensure that the human rights impacts arising from large-scale oil industry activity will be prevented, avoided or mitigated, much less contribute to the restoration of the rule of law.

Human rights challenges facing the Venezuelan oil industry

The legislative reform poses a series of challenges regarding the protection of human rights. Key challenges include:

• The reform prioritises “economic balance” without addressing the human rights impacts of oil activities, including political persecution of workers, impacts on Indigenous Peoples and the environment, and on public services for the general population, as well as issues of corruption and lack of accountability.
• Although the law maintains the principle of “environmental protection,” it does not align with the need for greater access to information, public participation and access to justice in environmental matters. These aspects are enshrined in the Escazú Agreement, a treaty Venezuela has not ratified.
• In terms of oil spills, the latest report published by state oil company Petróleos de Venezuela, S.A. (PDVSA) in 2016 on spills in its operations recorded 8,250. Between 2016 and 2021, civil society organisations identified at least 199 spills, and in 2024, they identified at least 74 spills. The lack of accountability on the part of the oil industry itself, coupled with barriers to accessing information stemming from policies of opacity, prevent a true understanding of the magnitude and impacts on affected ecosystems and communities.
• There have been documented cases of persecution against workers within the oil industry, the criminalisation of independent union activities, and reports of arbitrary dismissals for political reasons “motivated by political expressions contrary to the ruling party or participation in union activities.”

The UN Guiding Principles on Business and Human Rights establish the duty of states to “protect and promote the rule of law” by establishing adequate mechanisms for accountability, legal certainty and transparency. Although the reform of the Hydrocarbons Law refers to these elements as principles for the sector, Venezuela lacks a functional rule of law for both companies and society at large, as documented by various international mechanisms designed to ensure them. In this context, there are no safeguards regarding human rights risks arising from extractive industry activities or for the prevention of corruption, nor are there adequate and effective mechanisms for redress that would allow victims to access justice. Regulatory gaps aside, businesses are responsible, in accordance with international and regional standards on business and human rights, for preventing and mitigating any negative impacts their operations may cause, as well as remedying any harm should it occur.