CARACAS – In a significant shift in policy, Venezuela’s legislature has given the green light to the privatization of the oil industry, overturning a cornerstone of the socialist agenda that has dominated the nation for over 20 years.

This legislative move by the National Assembly comes shortly after the dramatic ousting of former President Nicolás Maduro during a U.S. military intervention in Caracas.

The proposed energy sector reforms now await approval from interim President Delcy Rodríguez. These changes were introduced following U.S. President Donald Trump’s declaration of his administration’s intent to manage Venezuela’s oil exports and rejuvenate the struggling industry through increased foreign investment.

The new law aims to grant private enterprises the authority to manage oil production and sales, alongside provisions for independent arbitration in disputes.

Rodríguez’s administration anticipates that these reforms will reassure major U.S. oil companies, which have been wary of resuming operations in the politically unstable nation. Many of these companies suffered setbacks when Venezuela’s government prioritized the state-owned Petróleos de Venezuela SA (PDVSA) under the previous legislation implemented two decades ago.

The revised law would modify extraction taxes, setting a royalty cap rate of 30% and allowing the executive branch to set percentages for every project based on capital investment needs, competitiveness and other factors.

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.”

Meanwhile, 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.

Oil workers dressed in red jumpsuits and hard hats celebrated the bill’s approval, waving a Venezuelan flag inside the legislative palace and then joining lawmakers to a demonstration with ruling-party supporters.

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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