New Hydrocarbons Law: A New Legal Landscape for Private Investment in Venezuela  

Following its publication in the Official Gazette on Thursday, 29 January 2026, the amendment to the 2006 Organic Hydrocarbons Law marks a turning point in Venezuela’s legal framework for the hydrocarbons sector.
 

Travieso Evans Arria & Rengel | Following the publication in the Official Gazette on Thursday, January 29, 2026, of the reform of the 2006 Organic Hydrocarbons Law, a turning point is marked in the legal framework of the hydrocarbons sector in Venezuela.

From the initial review, the following stands out:

1- A new Article 8 is included which makes very clear the possibility of submitting to arbitration any disputes that may arise in connection with the performance of activities under this law. This is a major step forward.
The Ministry of Hydrocarbons, in consultation with the Office of the Attorney General of the Republic, shall establish the guidelines to define the dispute resolution clause. Clauses agreed upon in accordance with such guidelines shall not require the opinion or authorization set forth in the Organic Law of the Office of the Attorney General of the Republic or the Commercial Arbitration Law. This last point should not be concerning, as in the past this was handled with a "blanket authorization," which can be replicated.

2- Article 22 of LOH2006 (now 23) is modified to include that the primary activities (exploration, extraction, initial transportation and storage) may be carried out by (i) the State, PDVSA and its subsidiaries, (ii) mixed companies in which the Republic must hold more than 50% of the share capital, and (iii) private companies under contracts executed with companies wholly owned by the Republic or their subsidiaries.
This is one of the substantial changes in the Law. Now private companies may operate individually without the need to form mixed companies, but they may only do so through operating agreements with PDVSA and its subsidiaries.

3- Article 25 places PDVSA and its subsidiaries and mixed companies on equal footing with operators under contracts. This article clarifies that PDVSA and its subsidiaries may assign to the private party the right to perform primary activities (reserved to the State), which appears to dismiss outright the position that private parties should be treated as contractors. They must instead be treated as operating companies, regardless of the wording of their contracts with PDVSA and its subsidiaries. This article states that the assignment shall be made with prior approval of the Ministry, which certainly provides the private investor with the corresponding legal certainty, since it involves assigning an activity reserved to the State.

4- An excellent modification is included in Article 25 (now 26) which establishes that contracts entered into under this Law (mixed companies and CPPs) "shall maintain the originally agreed economic-financial balances, as well as any subsequent benefit that improves the conditions originally agreed upon, which shall be preserved throughout the term of the contract. When, after its execution, changes occur in the legal, fiscal, regulatory or contractual framework that negatively and substantially affect the project’s economics, the National Executive shall delegate to the Ministry with competence in hydrocarbons the necessary adjustments to restore such balance, through the modification of royalties, taxes, fees, contractual terms, economic conditions, or compensation mechanisms, in order to restore the operator to the economic position it would have had if such changes had not occurred."
The final version of the Law establishes that the financial equilibrium shall be respected throughout the entire life of the project, and not only until the investment is recovered, as was established in earlier projects.

5- Article 33 of LOH2006 (now 34) is modified to eliminate the requirement that the National Assembly approve the conditions applicable to the formation of mixed companies. This is now under the full control of the Executive, which merely has to inform the Assembly. This simplifies the process of establishing mixed companies. However, the Law states that notification to the National Assembly is made for the purpose of parliamentary oversight. It is unclear what this means. Is an act of the National Assembly approving the project required?
Additionally, this article clarifies that mixed companies will be excluded from the Public Procurement Law and its regulations, and must instead implement transparent procurement mechanisms. A major achievement in ensuring contractual agility for mixed companies.

6- Article 34 of LOH2006 (now 35) is amended. The duration of mixed companies remains 25 years, plus a possible 15-year extension subject to Ministry approval.
A right of first refusal is added in favor of the majority shareholder (PDVSA) for the acquisition of shares in the event of assignment, sale, or transfer by the private shareholder of the mixed company (this generally exists in the bylaws of mixed companies, so it is not a substantial change).
The right of reversion or transfer to the Republic of land and permanent works is clarified, including facilities, accessories, and equipment used in primary activities, as well as any other assets acquired for such activities. This amendment adds that the data obtained, generated, processed, and interpreted also reverts to the State.

7- The important new Article 36 is incorporated, allowing the minority private partner of a mixed company to: (a) directly market all or a portion of the crude extracted, (b) manage its foreign currency flow, and (c) manage project operations directly or through a service provider (the cost of such services must be reasonable). It is clarified that the cost per barrel must be equal to or lower than PDVSA’s.
This article is a major achievement, as it legally enshrines the possibility for the private "B partner" to control operations in mixed companies. However, the major question remains: how will PDVSA, as the majority shareholder, provide funding for the projects (loans from the B partner, payment in kind through production, etc.)?

8- A new Section is added to regulate the "Contracts for the Development of Primary Activities."
According to the articles in this Section, these contracts consist of the private company assuming the comprehensive management of the primary activities, at its exclusive cost, account, and risk. Neither the Republic nor its subsidiaries will assume financial commitments or debts arising from the development of these operations. The selection of these investors will not be subject to the Public Procurement Law.

The private party’s compensation may be:
(i) a percentage share of the extracted crude, which may be marketed directly by the private party, or
(ii) any other form of participation in the project’s profits.

PDVSA and its subsidiaries will grant the use of existing assets to these private operators. The consideration will be set as a percentage of the volume of hydrocarbons in the corresponding contract.

At the end of the Contract term, all constructed or incorporated assets revert to the State without compensation, and it is clarified that the data also reverts.

The new Article 44 establishes that PDVSA and its subsidiaries are collection agents for the payment of royalties, national taxes, and parafiscal contributions.

9- The new Law significantly modifies the "Government Take."
Below we summarize the changes:

Special Advantages
Article 38 eliminates the possibility of including, in agreements granting the right to carry out primary activities, increases in royalties, contributions, or other considerations provided in this Law. However, the so‑called "special advantages" in favor of the Republic remain, as an economic consideration for access to hydrocarbons.

Royalties
The new Law sets a royalty of up to 30% of extracted volumes, which may be reduced without limits by the Ministry with competence in hydrocarbons depending on each project during its execution phases, taking into account:

1. The nature of the project
2. Capital investment requirements
3. Project economics
4. The need to ensure international competitiveness

The reduction is no longer limited to mature or extra‑heavy crude reservoirs as provided in LOH2006, and may be granted without restrictions to both mixed companies and private operating companies.
 

New Integrated Hydrocarbons Tax
The following taxes—previously applicable to those carrying out primary activities—are eliminated: Superficial Tax, Own Consumption Tax, General Consumption Tax (already repealed by LIVA), Extraction Tax, and Export Registration Tax.
In their place, a single tax ("monotributo") called the Integrated Hydrocarbons Tax is established, with a rate of up to 15% of monthly gross revenues. Gross revenues are defined as the total value of hydrocarbons extracted and not reinjected.
The Integrated Hydrocarbons Tax will be determined monthly and settled annually. However, it is clarified that the tax will be advanced monthly. The transitional provisions grant a 30‑day period to issue the regulations governing this tax.
The Ministry with competence in the matter will determine the rate of this integrated tax according to each project during its execution phases; that is, it may vary as the project progresses, considering: the nature of the project, investment requirements, project economics, and international competitiveness.

On Income Tax
The Ministry of Finance may reduce the 50% rate applicable to Income Tax (ISLR) in order to guarantee the economic balance of the project. No limits are established for such reduction.

Exemption from taxes and parafiscal contributions
The new LOH establishes that legal entities (public or private) that carry out the activities referred to in this Law shall be exempt from paying the following taxes and special contributions:

1. Tax on Large Estates (IGP).
2. Special contribution established in the Organic Law on Science, Technology and Innovation (LOCTI).
3. Special contribution established in the Organic Law on Sports, Physical Activity, and Physical Education.
4. Special contribution established in the Organic Law on Drugs (LOD).
5. Contribution established in the Law on the Protection of Social Security Pensions in the Face of the Imperialist Blockade.

It is established that the activities referred to in the Law are not subject to the social responsibility commitment set forth in the Public Procurement Law, nor to state or municipal taxes. Additionally, the transitional provisions repeal the Law that created the Special Contribution for Extraordinary and Exorbitant Prices in the
International Hydrocarbons Market (Windfall Tax).

Likewise, the transitional provisions repeal the National Assembly Agreement approving the Terms and Conditions for the Creation and Operation of Mixed Companies and the Model Contract (Official Gazette No. 38.410 of March 31, 2006), as well as the Agreement approving the modification of those terms (Official Gazette No. 39.273 of September 28, 2009), which established the so‑called Shadow Tax and other special royalties.

Thus, individuals or entities carrying out primary hydrocarbon activities are subject to the following concepts:

• Royalties: Up to 30% of extracted and non‑reinjected hydrocarbons, with unlimited reductions depending on the project.
• Integrated Hydrocarbons Tax: Up to 15% of gross revenues, with unlimited reductions depending on the project.
• Special advantages: Economic consideration for access to hydrocarbons (no specific percentage or amount is indicated).
• Income Tax: Up to 50%, with unlimited reductions to guarantee the economic balance of the investment.
• Financial Transactions Tax (IGTF): 3% on payments made in a currency other than legal tender, or cryptoassets other than those issued by the Republic: (i) when mediated by financial institutions, and (ii) without such mediation when made to a Special Passive Subject.

The possibility that the rates for Royalties, the Integrated Hydrocarbons Tax, and Income Tax may be reviewed and reduced according to the specific economics of each project is one of the most valuable achievements of this new Law and, if managed correctly, places Venezuela in a competitive position to attract private investment in the hydrocarbons industry.

10- The new Article 69 introduces a possibility that did not exist in LOH2006: mixed companies and private companies with operating contracts may directly market crude oil. This is an essential achievement in this new Law. The Law requires the private party to guarantee that sale prices are equal to or higher than the prices obtained in the market by PDVSA or its subsidiaries.

11- The Law on the Regularization of Private Participation in Primary Activities provided in Decree No. 1,510 with the Force of the Organic Hydrocarbons Law (Official Gazette No. 38.419 of April 18, 2006), and the Organic Law reserving to the State Goods and Services related to Primary Hydrocarbons Activities (Official Gazette No. 39.173 of May 7, 2009), are repealed. This was key to opening the field to private‑sector service contractors, who had been restricted under the 2009 Law.

12- The Law repeals all National Assembly Agreements that imposed conditions on Mixed Companies, so Mixed Companies become automatically and fully subject to the LOH without further limitations.13- The Ministry of Petroleum will make the necessary adjustments to Mixed Companies, CPPs, and other recently executed contractual models. The Law clarifies that such adjustments may not imply any worsening of conditions.

13- The Ministry of Petroleum will make the necessary adjustments to the Mixed Companies and the CPPs and other recently executed contractual models. The Law clarifies that this may not imply a worsening of the conditions.

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