Venezuela–United States oil deal: the law that changed seven months earlier

Of the four descriptions given this week of the largest oil agreement in Venezuelan history, only one says who helped write the rules it was signed under. It is in the fact sheet the White House published on September 1: the concessions are governed by "Venezuela’s new hydrocarbons law, adopted with U.S. support." That law was published on January 29. The agreement was announced on August 28.

Between one date and the other, Venezuela’s National Assembly lost the power to debate the terms of an oil contract. No one took it from outside: the Assembly repealed it itself, in the reform it passed on January 29. On Tuesday, seven months later, that same Assembly endorsed this agreement without having seen the contract, which remains unpublished.

What is known of the deal comes from four communications by its own participants, made over five days, and they do not agree on the term, on the counterparty or on the tax figure. None of the four is the contract.

What the National Assembly stopped being able to do

The Organic Hydrocarbons Law that governed for twenty years required the formation of a joint venture and its terms to carry "the prior approval of the National Assembly," and gave parliament a concrete power over the content: it could "modify the proposed terms or set those it deems appropriate." That was Article 33.

Article 6 of the reform published in Extraordinary Official Gazette 6,978 replaced it. In the text now in force, the President of the Republic authorizes the terms and they are "notified to the National Assembly, for the purpose of exercising parliamentary oversight." Approving beforehand and being able to change the terms, on one side; being informed afterwards, on the other. The distance between the two wordings is the distance between negotiating and being told.

The same reform removed two further constraints. Joint ventures and oil contracts were "excluded from the scope" of the Public Procurement Law — the general statute that imposes tender documents, comparison of bids and publicity on any State purchase — with an open instruction to apply "transparent contracting mechanisms," without saying which. And the clause requiring disputes to go to Venezuelan courts "without such disputes giving rise on any grounds to foreign claims" disappeared from the text: it does not appear once in the law in force. In its place came an article authorizing the parties to agree to mediation and arbitration, exempting those clauses from the opinion of the Office of the Attorney General.

What parliament passed on Tuesday

The National Assembly met in extraordinary session and approved, by show of hands, with a qualified majority and the abstention of a dozen opposition deputies, a pronouncement its own text titles "Endorsement of the Binational Energy Agreement between Venezuela and the United States." Deputy Miguel Pérez Abad presented it. The text ratifies "the full sovereignty and inalienable ownership of the Venezuelan State over its resources" and speaks of a twenty-five-year term.

An endorsement and an approval are different acts. Approving a contract requires having its terms, its duration and its consideration in front of you, and ruling on them. Tuesday’s pronouncement adheres to an agreement whose text has not been published, and assigns it a twenty-five-year term on the same day the U.S. Government wrote that the concessions run for a hundred.

There is a second discrepancy on the same date. The pronouncement calls the agreement binational. Hours earlier, the U.S. Secretary of State had said the opposite in an interview: "this really is not an agreement with the interim government; it is with a private company that is participating alongside the United States." The two sides of the same deal describe it, on the same day, as legally different things.

The question only the contract answers

Article 150 of the Constitution sets two rules. The first: contracts of national public interest require Assembly approval "in the cases determined by law" — and the law that determines those cases is the one rewritten in January. The second is a prohibition: "No contract of municipal, state or national public interest may be entered into with foreign States or official foreign entities, or with companies not domiciled in Venezuela, nor transferred to them without the approval of the National Assembly."

Whether that prohibition reaches this agreement depends on two facts that have not been published: who signs on the Venezuelan side and who exactly the counterparty is. The hydrocarbons law offers two vehicles. One is the joint venture, capped at twenty-five years and extendable to forty. The other is the contract for the development of primary activities, created by January’s reform, which requires a "private company domiciled in Venezuela" and to which the law sets no term at all. A hundred years does not fit the first.

Those who hold that the agreement required a parliamentary vote point out that both governments presented it as a pact between States and that the U.S. fact sheet is signed by two secretaries. Those who hold the opposite point out that the counterparty to the Venezuelan contract is a company and that the U.S. stake sits in its corporate parent, outside that contract. It is a controversy that reading press releases does not settle: it is settled by reading the contract, and the contract is not there.

Former Supreme Tribunal justice Blanca Rosa Mármol de León holds that the agreement is void, and the state oil company’s former president, Rafael Ramírez, calls it unconstitutional and injurious. Economist Francisco Rodríguez, without ruling on validity, publicly asked how the concurrence of competing offers that Article 39 requires for selecting operators was promoted. That article allows direct selection "for reasons of public interest," on one condition: the prior approval of the Council of Ministers. That act is collegiate, dated and numbered, and it has not been published either.

What each side obtained

The September 1 fact sheet details the U.S. position, and it does not describe a passive partner. The Department of War’s Office of Strategic Capital receives 35% of the equity of the operator’s corporate parent. The State Department obtains the right to buy 20% of output at production cost and the right of first refusal on the remaining 80%. The U.S. Government "has a veto power over the appointment of any member of the board of directors" and "a majority of the board of directors must be U.S. citizens." Its agreement with the company is governed by U.S. law and subject to that country’s courts.

Three days before that publication, the Department of War’s chief spokesperson had told a press query that the Office of Strategic Capital "does not take equity stakes in private companies" and that its statutory authority "is strictly limited to providing capital assistance in the form of a loan, loan guarantee, or technical assistance." Both statements are official and they have not been reconciled. Which legal power that stake hangs from is a question with a documentary answer, and nobody has given it.

On the Venezuelan side, what is known of the return are the figures the acting presidency announced: $209.335 billion in taxes, which at a $65 reference price works out to nineteen dollars a barrel. The U.S. fact sheet, two days later, projects some $200 billion. That is nine billion of difference on the same item, and neither figure was published with the model behind it.

The announced rate names two taxes, royalty and income tax. The regulation the same government published on July 7 organizes oil taxation around two others: royalty and an integrated hydrocarbons tax, whose sum runs in bands of 20 to 35 percent of gross revenue depending on the state of the field. The integrated tax does not appear in what was announced. Either these seventeen fields sit outside that scale, or the per-barrel figure is incomplete.

Where the money runs

Whatever the figure, its collection route was decided earlier. The fact sheet the U.S. Department of Energy published on January 7 provides that revenues from the sale of Venezuelan crude and products "will settle first into U.S.-controlled accounts at globally recognized banks," and that those funds "will be disbursed for the benefit of the American people and the Venezuelan people at the discretion of the United States government." It remains in force.

Spread over twenty-five years, the announced taxes come to about $8.36 billion a year. The Central Bank of Venezuela recorded $18.2 billion in crude export billings in 2025. The two numbers measure different things — tax take from one project against a whole country’s export billings — and so they serve as scale, not as subtraction.

The four papers that are missing

The contract. It settles the term, the counterparty, the tax rate and whether Article 150 applies. It is the document every open question depends on.

The Council of Ministers act. The law requires it to award without a tender. It is dated and numbered, and it can be requested without opening the contract.

The legal basis for the 35%. One U.S. body denied in writing having the power to take equity stakes, and another official document attributes one to it. The instrument that supports it is missing.

The terms act for the seventeen fields. With the combined rate in view, there stops being any argument about whether the announced tariff is complete.

On Saturday, at nine forty-five at night, the acting president explained from Miraflores an agreement to produce one and a half million barrels a day. Zulia had been without power for an hour, along with Táchira, Mérida, Trujillo and Barinas. The mature fields this agreement sets out to revive sit underneath that blackout, and none of the missing papers supplies the kilowatt that would lift them.