Both the oil and gas sectors are governed by the Venezuelan constitution. According to the constitution, all hydrocarbon reservoirs within Venezuelan territory belong to the republic. 

Hydrocarbons belong to the operator-producer at the wellhead.

In addition, the sale of hydrocarbons is subject to certain restrictions, as outlined in 3.1 Forms of Private Investment: Midstream/Downstream.

The Ministry of Petroleum (Ministerio del Poder Popular de Petróleo – MENPET) is the government body in charge of overseeing the oil and gas industry.

Lower-ranking authorities have been created in the past, but with a limited and circumstantial purpose, always under the control of MENPET.

Petróleos de Venezuela, SA (PDVSA) and its subsidiaries form the national oil and gas company. PDVSA is a corporation wholly owned by the state, and its operation is controlled and supervised by MENPET.

Oil legal regime – the constitution; the Organic Hydrocarbons Law (OHL) governing oil and associated gas; as well as other laws and regulations issued for specific matters. 

Gas legal regime – the constitution; the Gas Law and its Regulations (governing non-associated gas); and the OHL, for upstream activities of associated gas up to the wellhead.

For Oil Projects

Hydrocarbon exploration, extraction, initial transportation, and storage fall within the legal definition of “primary activities” under the OHL. Primary activities may only be conducted:

• directly by the state;
• by 100% state-owned companies; or
• by joint ventures (Empresas Mixtas) in which the state holds more than 50% of the shares.

Private participation is therefore only possible through Empresas Mixtas.

For Gas Projects

Gas Law permits 100% private operators to engage in such activities for non-associated gas, with a prior licence issued by MENPET (ie, Ypgeras and Cardon IV, among others).

Oil Developments

In oil projects, in order for a private investor to perform upstream activities, the incorporation of an Empresa Mixta is required. 

The incorporation of the Empresa Mixta involves the following steps.

• The selection of private participants through a public bidding process carried out by MENPET or by direct awarding, due to public interest reasons or special circumstances, with the prior approval of the council of ministers.
• Approval of the project by the Venezuelan national assembly (NA). The NA will issue an accord (the “NA Accord”) on the terms of the project, for which MENPET must inform it, prior to the fact, of all matters concerning the incorporation of the Empresa Mixta, the project’s terms and conditions, and any special advantages in favour of the republic.
• The NA may modify the conditions proposed by MENPET or establish any other conditions. The OHL sets the minimum conditions that must be met.
• A decree authorising the incorporation of the Empresa Mixta. This is the second act formalising the incorporation of the Empresa Mixta and is issued by the national executive through a decree and by mandate of the NA and the OHL.
• Resolution of delimitation of the geographic areas in which the joint venture will carry out the primary activities. This resolution is issued by the MENPET under Article 23 of the OHL, to delimit the geographical areas where the joint venture will carry out the primary activities.
• The Em-presa Mixta Agreement is a contract between the future shareholders of the Empresa Mixta. For the duration of the Empresa Mixta’s existence, this contract will govern its main affairs.
• Articles of incorporation/by-laws of the Empresa Mixta. The Empresa Mixta may be effectively incorporated before the commercial registry once all the aforementioned acts have been issued and signed. These by-laws will regulate this company.
• Decree transferring the right to perform primary activities. By this decree, the national executive authorises the joint venture to conduct the primary activities which, under the constitution, were reserved for the state. This is one of the last acts or documents necessary for the operation of the joint venture, since it occurs once it is formally incorporated, having its own legal personality to be the holder of the rights and obligations contained in this decree. This decree may also set special advantages in favour of the Republic, such as an increase in royalties, contributions or other considerations. 

Gas Developments

Under a licence issued by MENPET, private entities may develop non-associated natural gas reservoirs. There is a maximum 35-year licence period, which can be extended for an additional 30 years.

According to the Gas Law, licences must be awarded through a public bidding process; however, MENPET may grant licences directly if authorised by the council of ministers for reasons of national interest.

The MENPET must approve the appointment of an operator if the licence is granted to more than one participant.

It is not mandatory for the state to participate in gas projects; a number of licences, however, grant certain rights to the state. These licences require the negotiation and execution of a joint venture agreement to regulate the relationship between private investors and the state.

The government take of upstream activities includes several concepts (royalties, taxes and contributions), as follows. 

Royalties

Although royalties are not considered to be a tax, due to their importance in the government take, they can be included in this list. The OHL establishes a royalty right in favour of the state for hydrocarbon volumes extracted. The royalty rate is generally 30% of the extracted hydrocarbons. It may, however, be possible to reduce this to as low as 20% in some cases.

Regarding non-associated gas, the Gas Law provides a royalty rate of 20%. Government policy today is that associated gas is subject to a 30% royalty, although this is debatable.

In both cases, payment of the royalty may be demanded in cash or in kind, in full or in part, by the national executive. Unless expressly requested in kind, payment is presumed to be in cash.

Surface Tax

According to the OHL, the national executive is authorised to charge a tax on the surface of the delimited area that is not being exploited, equivalent to one hundred tax units (100 UT) per square kilometre or fraction thereof not being exploited, for each elapsed year. Each year, this tax increases by 2% for the first five years, and then by 5% thereafter. At the time of writing, the value of each tax unit was less than USD0.10.

Own Consumption Tax

Empresas Mixtas are required to pay tax on their own consumption of hydrocarbons in the performance of their activities, which is 10% of the value of each cubic metre (m³) of the derivatives or oil by-products and derivatives from hydrocarbons. Currently, the value is fixed by MENPET.

Extraction Tax

Hydrocarbons extracted by the Empresa Mixta are subject to a tax of 33.3% of their value. The tax must be paid along with the royalty each month. The Empresa Mixta is entitled to deduct from this tax what it would have paid as a royalty, including any additional royalty it paid as a special advantage (if applicable, in accordance with the corresponding NA Accord). In certain cases, the national executive may reduce the applicable rate to 20%.

Export Registration Tax

This tax applies to any export or internal sale that is treated as an export in accordance with the OHL, and it is equivalent to 0.1% of the value of all hydrocarbons exported from any port on the national territory. Values are calculated based on the price at which hydrocarbons are sold to corresponding buyers.

Income Tax

Profits from territorial and extraterritorial sources are subject to Venezuelan income tax. Empresas Mixtas, being legal entities domiciled in Venezuela, are subject to income tax.

For persons or entities engaged in oil and gas exploration, exploitation, refining, transportation, and the sale of hydrocarbons and their derivatives, a proportionate rate of 50% is applied.

Companies that exclusively refine or upgrade extra-heavy crude oil are expressly exempt from the 50% rate, so they pay the same rate as ordinary taxpayers (ie, 34%). Because all the projects located in the areas containing heavy and extra-heavy crude oil are carried out by Empresas Mixtas, which in turn perform primary activities subject to 50% taxation, this treatment has no practical application in reality.

Those involved in non-associated gas projects are subject to a proportionate rate of 34%, as provided in the Gas Law.

Value Added Tax

Transfers of tangible personal property and provision of services are subject to value added tax. A general tax rate of 16% will be applied. Since the sale of hydrocarbons by the Empresas Mixtas is regarded as an export, the VAT rate on hydrocarbons sold to PDVSA or its subsidiaries is 0%.

Special Contribution on Extraordinary Prices and Exorbitant Prices of the International Hydrocarbons Market

This contribution is applicable to Empresas Mixtas that sell natural and synthetic hydrocarbons, derivatives, as well as by-products, to PDVSA and its subsidiaries. Contribution rates will depend on the price quotation of the basket of liquid hydrocarbons, and whether it qualifies as “extraordinary” or “exorbitant”. 

Contribution on extraordinary prices

If the monthly average of the international price of the basket of Venezuelan liquid hydrocarbons is greater than the price established in the Budget Law of the respective fiscal year, but less than USD80 per barrel (USD80/b), a 20% rate will be applied on the difference.

Contribution on exorbitant prices

This applies if the monthly average international price of Venezuelan liquid hydrocarbons is greater than USD80/b.

In order to calculate the special contribution, the following brackets will be used:

• when the exorbitant price is greater than USD80/b, but less than USD100/b, 80% of the difference between the two prices will be applied;
• if the exorbitant price is greater than or equal to USD100/b, but less than USD110/b, 90% of the difference between both prices will be applied; and
• if the exorbitant price is greater than or equal to USD110/b, the difference between both prices will be applied at a rate of 95%.

Special Advantages

The NA Accord has sometimes granted a special advantage to the republic on a case-by-case basis for oil projects, depending on the project.

Additional Royalty

In some cases, for oil projects, the NA Accords have provided additional royalties in favour of the republic, for an additional rate of 3.33% of the hydrocarbons produced and sold to PDVSA or its affiliates.

LOCTI Contribution

According to the Organic Law of Science, Technology and Innovation (LOCTI), companies that engage in one of the economic activities listed in the OHL will contribute 1% of their gross income each month.

Anti-drug Contribution

The National Anti-drug Fund requires legal entities with more than 50 employees to contribute 1% of their profits every year. 

Contribution for the Development of Sports, Physical Activity and Physical Education

Companies that conduct economic activities in the country are subject to a special contribution imposed by the Organic Law of Sport, Physical Activity and Physical Education. The contribution is 1% of the previous year’s net income.

See 2.3 Typical Fiscal Terms: Upstream.

Oil Sector

According to the Income Tax Law, Empresas Mixtas are subject to a special proportional tax rate of 50% of their net income.

Gas Sector

The income tax rate for non-associated gas is 34%, and 50% in the case of associated gas. 

When structuring foreign investment for oil and gas activities in Venezuela, it is advisable to take into consideration the investment treaties in force, as well as treaties to avoid double taxation that Venezuela has entered into with several countries.

PDVSA by itself can carry out primary activities. PDVSA or any subsidiary (eg, Corporación Venezolana del Petróleo, SA, or CVP) should hold, as provided by OHL, an equity greater than 50% in the Empresa Mixta. In addition, the corresponding Empresa Mixta agreement must be approved by PDVSA (or its affiliate), MENPET and the NA. 

In principle, the Venezuelan government, through PDVSA and its affiliates, controls all the country’s oil activities. 

See 1.3 National Companies, 2.1 Forms of Private Investment: Upstream and 2.2 Issuing Upstream Licences/Obtaining Hydrocarbon Rights.

According to Article 18 of the OHL, Empresas Mixtas are required to include national companies in their contracting processes in order to ensure the optimal and effective use of goods, services, human resources and capital. Likewise, entities subject to the Gas Law must include national companies, personnel, goods and services in their contracting processes.

For companies to obtain the relevant licences, they must comply with the Guidelines for the Participation of National Capital in Gas Projects (issued by MENPET in 2002). The guidelines are aimed at encouraging the formation of local companies and the participation of locals in gas projects through the incorporation of Venezuelan goods, services and private entities. According to the guidelines, licensees must adhere to the percentages of national participation and/or content.

The Public Procurement Act, the primary law governing purchases made by the state, contains provisions designed to stimulate the production of goods, services and works in the country. Therefore, the Public Procurement Act favours bids with a higher “national content” and “national added value”.

The labour legislation and regulations of 2012 contain additional provisions for hiring foreign workers. A minimum of 90% of the employees must be Venezuelans, and foreigners cannot earn more than 20% of the salaries of their national peers. If there are no technical skills or professionals available in the country, the Ministry of Labour may authorise temporary exceptions to this limitation.

Oil Developments

There are no specific authorisations for different stages of oil development. The approval of any exploration, evaluation or development plan is reserved for the Empresa Mixta’s shareholders or board, so the government indirectly controls the development through the state-owned joint venture partner. However, the private joint venture partner may have certain veto rights. Even so, some production quotas and deadlines may be set. 

Gas Developments

The maximum period for exploration activities under gas licences is five years. To be approved by MENPET, the participant must submit an evaluation plan within 90 days of discovering non-associated natural gas; within 30 days after well-test completion. The evaluation period should not exceed two years. Upon a declaration of commerciality, the participant must submit a development plan for MENPET’s approval.

The maximum initial term of the licence is 35 years, with a possible extension of no more than 30 years.

Regarding upstream activities in the oil sector, as mentioned before, the documents of the project must provide the particular conditions related to the structure and operation of the project. In the event of discovering greater hydrocarbon reserves than estimated, the position of the government in the last few years is that an extra consideration must be paid (bonus payment) to the republic for the right to such additional hydrocarbons implying, in many cases, the extension of the period of the project.

Licences for the development of upstream activities in the gas sector have been granted for 25 years and include minimum requirements and obligations for the licensee in terms of seismic exploration programmes and well exploration. These activities must be carried out in periods from three to five years, depending on the complexity and maturity of the fields. In the case of already discovered reserves, some licences include the obligation to reach a certain production volume after a certain period.

Almost all the licences granted since the enactment of the Gas Law provide that gas production is to satisfy the domestic market, with the MENPET authorising surplus gas exports.

OHL does not regulate the transfer of interests. However, the transfer of oil development rights is subject to the restrictions outlined in the Empresa Mixta Agreement and the by-laws of the Empresa Mixta, which generally involve a right of first refusal by the public shareholder and the corresponding approval of MENPET.

According to the Gas Law, interests in gas developments may only be assigned with the prior approval of MENPET. Licence rights cannot be encumbered. Breach of these provisions triggers the revocation of the licence.

There are currently no local limitations on production. However, Venezuela, as a founding member of OPEC, is subject to agreement on prices and maximum production quotas.

In both the oil and gas regimes, midstream activities can be performed directly by the state or by 100% private entities (under the Gas Law, a permit is required from MENPET). 

The commercialisation of natural hydrocarbons, derivatives and by-products, however, is in principle reserved for state-owned companies in oil projects. In that sense, Empresas Mixtas may only sell natural hydrocarbons to 100% state-owned companies (PDVSA or its subsidiaries).

Syncrude (produced by upgrading extra-heavy crude oil) does not have to be sold to 100% state-owned companies because it is not considered to be a natural hydrocarbon product. Nevertheless, it is actually sold to a PDVSA subsidiary, not by mandate of law, but by contract. Thus, it is currently treated in the same way as crude oil. 

In addition, according to Article 10 of the OHL, pre-OHL state-owned facilities, their extensions, and modifications dedicated to refining and transporting hydrocarbons are reserved for the state. Venezuelan refineries are all pre-OHL, so they are all state-owned and reserved.

According to the Organic Law of Reorganisation of the Internal Market, the domestic distribution of derivatives and oil by-products must be directly performed by the state. Hence, the state has total control over distribution and, in practice, a monopoly on the retail of fuel.

According to the OHL, there is a difference between refining and industrialisation of oil since they have different entitlement procedures. The right to perform refining activities is granted through a licence, while the right to perform industrialisation activities is granted through a permit, both to be issued by MENPET.

Pursuant to the Gas Law, in order to conduct activities other than exploration and production of gaseous hydrocarbons, MENPET permits are required.

The OHL provides that “initial” transportation and storage of oil be reserved for the state as a primary activity. The OHL does not define “initial” transportation or storage. Thus, PDVSA, its affiliates and subsidiaries own and operate virtually all oil pipelines in Venezuela. 

The Gas Law, its Regulations, and the Storage and Distribution Rules relating to Liquefied Petroleum Gas Management (2010) mostly govern gas storage. It is possible for a private company, with or without government participation, to perform the storage activity (including for liquefied natural gas or LNG); however, MENPET must issue a licence or permit for the activity. The applicable tariff is based on the principles of reasonable profitability and the characteristics of the service.

See 2.4 Income or Profits Tax Regime: Upstream.

See 2.5 Federal or State Companies.

PDVSA (or its subsidiaries) commercialises crude oil and all other natural hydrocarbons. The Law on Rearrangement of the Internal Market gives the state total control over distribution and a virtual monopoly over retail.

This law reserves to the state the role of intermediating the supply of liquid fuels for reasons of national interest. Additionally, land, water and coasting transport activities for liquid fuels are reserved.

The national executive is responsible for carrying out reserved activities through MENPET, PDVSA or its subsidiaries. As a result, PDVSA and its subsidiaries supply liquid fuels to the domestic market.

See 2.6 Local Content Requirements: Upstream.

To construct and operate gas transportation pipelines, participants must obtain permits from MENPET. The terms and conditions for these types of permits are very similar to those for exploration, development and production licences. MENPET requires any operator of transportation systems to have technical qualifications. MENPET must approve transportation tariffs. 

Each permit will specify the terms, which must be in accordance with the law. A description of the project and any special considerations for the republic should also be included.

Gas processing and industrialisation activities, as well as the marketing of liquefied petroleum gas, are not covered by the provisions related to the reversal of assets (see 2.9 Transfers of Interest: Upstream Licences and Assets).

Venezuelan legislation makes a distinction between surface rights and the ownership of hydrocarbon reservoirs (all hydrocarbon reservoirs within Venezuelan territory belong to the republic).

Expropriation

Activities covered by the OHL and Gas Law are considered to be of public interest. The entities responsible for oil and gas development projects (or transportation, distribution and refining) can therefore request a court of law to grant them temporary occupation rights and, if necessary, expropriation of the corresponding land, to ensure permanent access rights. The Venezuelan State is able to carry out the expropriation process of the properties required in accordance with the Expropriation Law.

Indemnification

The participant usually negotiates easements or rights of way with the property owner. Permit-holders who are unable to achieve success in this process may initiate temporary occupation and/or an expropriation proceeding before Venezuelan courts, where the only issue to be discussed is the amount of indemnification due to the property owner. As part of the expropriation process, the entities entitled to carry out oil or gas projects may lawfully occupy the land and build the necessary infrastructure.

Expiry of Licence and Permit

OHL sets that the licence granted to perform refining activities must include a mandatory clause indicating that the land, facilities, accessories and equipment used, and any other assets acquired for the performance of the oil activities, must be maintained in good condition, and handed over to the state, free of liens and without indemnification, upon expiration of the licence.

The Gas Law establishes that permits issued by MENPET required to carry out the corresponding activities of gaseous hydrocarbons must provide that the land, facilities, accessories and equipment used and any other assets acquired for the performance of the activities, must be maintained in good condition, and handed over to the state, free of liens and without indemnification upon expiration of the permit. Processing and industrialisation of gaseous hydrocarbons and activities related to the commercialisation of liquefied petroleum gases are expressly excluded from this obligation.

Oil Sector

According to the OHL, initial transportation of hydrocarbons is reserved to the state as a primary activity and can only be carried out directly by the state, by state-owned companies or Empresas Mixtas. Virtually all oil pipelines in Venezuela belong to and are operated by PDVSA, its affiliates and subsidiaries.

The transportation of hydrocarbons, excluding initial transportation, is restricted to state-owned companies as provided in the OHL. This restriction also applies to the transportation of specific hydrocarbon derivatives.

Private investors desiring to engage in transportation activities of hydrocarbon derivatives must obtain prior permission from MENPET. The assignment or transfer of these permits will also require prior authorisation from MENPET.

Gas Sector

The Gas Law allows private investors to carry out transportation activities. In practice, all major transportation systems existing in Venezuela are owned and operated by PDVSA or its subsidiaries.

To construct and operate gas transportation pipelines, private investors must obtain permits from MENPET and the environmental authorities.

The specific terms and conditions will be set out in the corresponding permit, which must be in accordance with the Gas Law and its Regulations. A description of the project and any special considerations for the republic should also be included.

Oil and gas companies must grant third parties access to their infrastructure when they have a surplus or extra capacity under the OHL and the Gas Law. It is possible for these companies to charge for that service, and the terms and conditions should be negotiated between the parties, or otherwise set by MENPET.

Venezuela’s major transportation systems are owned by a state-owned company that is also a major gas producer. Thus, MENPET determines producers’ access to transportation capacity.

PDVSA or its subsidiaries (including Empresas Mixtas) own and operate most pipeline systems for both gas and oil, so conflicts have not been significant.

Production, transport and distribution activities cannot be controlled or developed simultaneously by one individual unless authorised by MENPET, unless separate accountability is maintained.

Only state-owned companies may commercialise natural hydrocarbons, derivatives and by-products. According to the OHL, Empresas Mixtas engaged in primary activities can only sell natural hydrocarbons to state-owned companies. It is possible for the national executive to reserve the commercialisation of certain oil derivatives and by-products to 100% state-owned companies by decree.

As an exception, Empresas Mixtas may be able to commercialise their products directly. 

Gas can be sold in the local market without restriction. Private entities are allowed to export their gas production under the Gas Law and licences. Nevertheless, there is a general provision to satisfy the local market.

Oil can only be sold cross-border by 100% state-owned companies (PDVSA or its subsidiaries). Empresas Mixtas may, however, be authorised to commercialise some oil derivatives and by-products directly, in some cases. 

Private investors can carry out natural gas exports with the approval of MENPET. Up to 90% of the gas produced can be exported under some licences (ie, some of the Plataforma Deltana licences).

Since the country has been self-sustained energy-wise, the current legal framework is not sufficiently developed from an energy-importing standpoint. (However, see 4.2 Sanctions).

Both oil and gas regimes require prior authorisation from MENPET for transfers, encumbrances and execution of rights granted by licences and permits.

The corresponding licence or permit may be revoked if such activities are carried out without the corresponding authorisation.

The Constitutional Law on Productive Foreign Investment establishes the general legal framework for foreign investment. Venezuela has entered into multiple Economic Co-operation Agreements with numerous countries, including OPEC, Petrocaribe and the Gas Exporting Countries Forum, regarding energy developments, in order to facilitate the execution of some projects.

Additionally, Venezuela has entered into a wide range of bilateral investment agreements with countries such as Barbados, the Netherlands, Canada, Chile, Spain, France, the United Kingdom, Peru, Portugal, Russia, Sweden, Switzerland and Uruguay, among others. 

In a treaty of this nature, investments are protected from unfair and unequal treatment or unlawful expropriation, depending on the mechanism adopted in the treaty (taking into account that Venezuela has not been a member of the ICSID Convention since 2012). 

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards is also part of Venezuela’s legal system.

Venezuela and its entities have been subjected to a series of economic sanctions imposed by the US government through the Office of Foreign Assets Control (OFAC).

US economic sanctions generally manifest in two forms: (i) blocking sanctions, which prohibit US persons from transacting with persons or entities included on the Special National Designee List (SDN List); and (ii) “sectorial sanctions”, which prohibit US persons from transacting with entities or persons designated by specific sanctions.

PDVSA was added to the SDN List by OFAC on 28 January 2019. As a result, PDVSA and its subsidiaries or controlled persons (Empresas Mixtas) are now regarded as “blocked” parties. Furthermore, as per Determination Pursuant to Executive Order 13850 (dated 28 January 2019), sectorial sanctions were imposed on the Venezuelan oil industry. In contrast to the oil sector, the gas sector has not been subject to determinations for the purposes of US sectorial sanctions.

Additionally, most gas projects are not considered blocked, because in addition to the lack of sectorial sanctions, neither PDVSA nor its affiliates are part of these projects (or are only part of them as a minority partner). As per the sanctions, these considerations arise when PDVSA or its subsidiaries hold a majority shareholding, which does not happen in gas projects.

However, OFAC has issued some licences for activities that would otherwise be prohibited, with regard to Venezuela’s oil and gas sector.

On 26 November 2022, the OFAC issued the General License 41 that authorises transactions that are ordinarily incident and necessary to the activities for or related to the operation and management by Chevron or its subsidiaries of Chevron’s joint ventures in Venezuela involving PDVSA or any entity in which PDVSA owns, directly or indirectly, a 50% or greater interest. This includes some Empresas Mixtas which are considered Chevron’s joint ventures.

This General License automatically renews on the first day of each month and is valid for a period of six months from the effective date of the License or the date of any subsequent renewal, whichever is later.

Due to the impact oil and gas activities have on the environment and their relevance to Venezuela, these activities are extensively regulated and several government agencies are involved in the process of issuing the permits, consents and authorisations generally required. 

Environmental protection is governed primarily by the constitution. Among the most relevant regulations in the environmental field are: 

• the Environment Organic Law (2006); 
• the Environmental Criminal Law (2012); 
• the Forest Law (2013);
• the Water Law (2007) and its Regulations (2018);
• the Water and Air Quality Law (2015); and
• the Substances, Materials and Hazardous Waste Law (2001).

The highest authority in this matter is the Ministry of Ecosocialism (MINEC). 

An environmental impact study must be conducted prior to the start of a project. 

In addition, environmental permits (granted by MINEC) are required for: occupying land; registering activities impacting the environment; drilling water wells; using water resources; affecting natural resources; and deforesting and moving soil, among others. Additionally, persons who operate in sectors that could potentially harm or degrade the environment (such as oil and gas) must register with the Registry of Activities Able to Degrade the Environment.

Regarding offshore developments, there are no special laws or regulations other than those previously mentioned. 

Additionally, there are no special health and safety regulations in this regard besides the general regimen set in the Labour Law and the Occupational Safety and Health Act. To guarantee employee safety, employers in this sector must comply with the laws and regulations, and PDVSA’s Collective Bargaining Agreement.

As part of the law, MENPET has the authority to inform the participant of which wells must be abandoned and what assets must be removed upon the expiration of the licence. It is the participants’ responsibility to undertake abandonment activities at their own expense and risk.

In the OHL, decommissioning of oil structures is not specifically addressed (except for the requirement that all assets revert to the state upon the termination of the conferred rights). The Empresas Mixtas should follow the guidelines issued by MENPET, and they should develop their own decommissioning programme approved by their board of directors, which requires the state-appointed directors to vote. Decommissioning terms are generally included in the project documents and agreements.

Regarding climate change laws, Venezuela has executed and ratified various agreements (such as the Vienna Convention for the Protection of the Ozone Layer, the Kyoto Protocol, the Montreal Protocol and the Paris Agreement). 

National regulations govern the protection of the ozone layer, air quality and atmospheric pollution.

In 2021, the Presidential Commission of the Green Climate Fund was established as an advisory body to the president for preparing projects for the Green Climate Fund.

Venezuela owns all hydrocarbon reservoirs in its territory. The national government regulates and taxes the oil and gas industry, and local governments do not have the authority to limit or prohibit oil and gas projects.

There are no specific laws or regulations other than the OHL, the Gas Law and its Regulations (see 1.4 Principal Hydrocarbon Law(s) and Regulations). 

There is no special scheme relating to LNG projects, which are regulated by The Gas Law and its Regulations.

Venezuela has not yet undertaken any major energy transition activities. A few wind and solar projects have been attempted, but have not been continued. However, Venezuela has great potential when it comes to wind and solar energy.

Venezuela has been producing oil for over a century and holds the world’s largest oil reserves (more than Saudi Arabia). Venezuela’s oil production capacity has declined in recent years, but the country could still be a major player in South America and globally. 

The NA recently enacted the Anti-blockade Constitutional Law for National Development and the Guarantee of Human Rights, which establishes the International Productive Investment Center (CIIP), which supervises private investments.

In addition, the Organic Law on Special Economic Zones, which was enacted in July 2022, regulates the creation, organisation, operation and administration of Special Economic Zones. This law prioritises energy, hydrocarbons, derivatives, by-products of hydrocarbons and alternative energies.

In February 2023, Venezuela and Colombia entered into a Bilateral Trade Agreement (BTA) that resulted in the removal of import duties on various manufactured goods. The BTA has not yet been ratified by the Venezuelan NA.