Venezuela's 105-Contract Push: Tiered Fiscal Rates Versus Legal Risk

By Olivia Hart, Rig & Refinery

Venezuela's state oil firm PDVSA is racing to lock in 105 new oil contracts by the end of this year, backed by an amended Organic Hydrocarbons Law with tiered fiscal rates of 20 to 35 percent. The framework was laid out publicly over the past two weeks during and after the 'Venezuela Global Investment Forum 2026', the first time the new government has presented the exact rates on a major international stage. The broad framework was written in January, after the U.S. removal of former president Nicolás Maduro that month, and clarified with fiscal regulations in July.

Venezuela's vice minister of commercial policy, Ricardo Gomez, presented the core message during and after the forum. The majority state control model built under Hugo Chávez and continued under Maduro is over, and company operators can now hold exclusive control over sector assets.

What do the new contract types offer?

The amended law creates varied routes into heavy-oil reserves, mature fields, offshore gas and refining infrastructure:

• Hydrocarbon productive participation contracts (CPPHs): a Venezuela-incorporated company operates a designated area at its own cost and risk for 25 years. With ministerial approval, it gains the legal right to sell its own share of production directly to international buyers, bypassing PDVSA's trading desks entirely.
• Restructured joint ventures with PDVSA.
• Direct contracts covering infrastructure and oilfield services.

The direct-marketing right reverses the Chávez-era monopoly under which PDVSA alone sold crude, leaving private partners waiting for revenue shares that frequently evaporated amid PDVSA cash-flow crises, defaults and U.S. sanctions.

Eni has already used the CPPH route. The Italian major transferred its Junín-5 heavy-oil field — 35 billion barrels of certified oil in place — to the contract type in September, moving from a minority joint venture position to exclusive operator.

How do the fiscal rates stack up?

The July investment framework regulations cap royalties at 30 percent and the integrated hydrocarbons tax at 15 percent. Combined royalty and tax rates are tiered by asset difficulty:

• 20 percent for new infrastructure and unexplored greenfield land.
• 25 percent for Orinoco Belt extra-heavy crude development.
• 30 percent for defunct or heavily damaged non-producing brownfield sites.
• 35 percent for existing operational assets in brownfield areas.

Qualifying offshore projects and developments incorporating upgrading or refining infrastructure may receive reductions of up to five percentage points.

On paper, this is Venezuela's most aggressive and pragmatically designed investment framework in decades, directly addressing the resource nationalism that drove foreign majors out under Chávez, with operatorship rights and direct marketing rights reducing corruption exposure and the historic cash-flow trap.

What could still go wrong?

The structural hurdles are substantial. Any major Western investment must still align with U.S. Treasury (OFAC) general licences, which Washington could revoke if policy shifts. Reviving mature fields or lifting refining throughput from 350,000 to 600,000 bpd requires billions in upfront capital, and Venezuela remains largely cut off from international banking and debt markets, making project financing extremely difficult to secure.

The larger risk is legal. Venezuela has a long history of expropriating assets and unilaterally rewriting contracts, and the manner in which the U.S. took control of the hydrocarbons sector supplies potential grounds. Trump's 'biggest oil deal in world history', signed on 2 September between Washington and Caracas, gave the U.S. control of 65 billion barrels of proven reserves out of a 303-billion-barrel total, across 17 fields, for a 100-year concession period. The private entity driving the deal, North American Blue Energy Partners (NABEP), instantly became the world's second-largest private oil company by reserves after ExxonMobil, with the U.S. Department of War holding a 35 percent equity stake.

Venezuela's constitution requires National Assembly approval for long-term concessions over strategic national resources. The deal was negotiated by an interim government whose constitutional legitimacy is contested. A future government could argue the interim administration lacked authority and declare the agreement ultra vires (beyond legal powers) and void. Venezuela's Supreme Tribunal of Justice could challenge, freeze or invalidate the NABEP concession even without a change in government, on grounds that the constitution strictly prohibits transferring control of oil reserves to a foreign power.

What is the watch item?

The interim government of President Delcy Rodriguez targets production above 1.5 million bpd from the 17 strategic fields over a 25-year term. Her government forecasts more than US$100 billion in investment and US$209 billion in tax revenue for the Venezuelan state. The 2 September deal survives under the U.S. '2025 National Security Strategy' released in December, which places Venezuela at the core of Washington's three-bloc 'Americas' sphere.

The watch item is the National Assembly's treatment of the NABEP concession and any Supreme Tribunal ruling on its constitutionality — either one could unwind the legal footing beneath every new contract signed under the 105-contract push.

(Analysis; price and production forecasts attributed to the cited officials.)