Summary of Venezuela Hydrocarbon Law reform

Economist Henkel García recently provided following summary of Hydrocarbon Law reform. Such reform is currently being discussed at Venezuela's National Assembly. It is widely believed that United States authorities have already welcomed these updated terms, facilitating further negotiations with potential investors into Venezuelan oil and gas industry. Delcy Rodríguez interim government holds qualified majority at National Assembly: thus passage of this law is expected after thorough discussion during last week of January 2026. Specific articles may require adjustments and amendments without compromising a general free market spirit of this reformed Hydrocarbon Law.

Operational management was previously mostly reserved for State. After reform, operational management can be exercised entirely by private partner. Marketing was previously handled by state monopoly (PDVSA). After reform, marketing will allow exceptional authorization for direct private marketing. Royalties were previously fixed at 30%. After reform, royalties will be flexible, they can be reduced to 15% based on viability. Litigation was previously handled by national courts. After reform, litigation will allow for independent arbitration and mediation. Foreign exchange Management was previously centralized and controlled. After reform, accounts will be allowed in any currency and jurisdiction.

Nature and control of joint ventures on mixed-ownership companies requires majority participation by Republic, granting shareholder control. New contract operating companies will be private companies domiciled in Venezuela through contracts with subsidiaries of Republic.

Operational Management of joint ventures stipulate that minority shareholder may be authorized to exercise direct technical and operational management or through specialized third parties. New

contract operating companies allow operator to assume comprehensive management of activities at its sole cost, expense, and risk.

Marketing of joint ventures stipulates minority shareholder may be authorized to market directly if price exceeds that achieved by state-owned companies. New contract operating companies allow remuneration consisting of a percentage of production volumes, which they may market directly.

Financial management of joint ventures stipulates they may open and manage bank accounts in any currency and jurisdiction for administration of funds. New contract operating companies propose that Republic and its subsidiaries do not assume financial commitments or debts arising from these operations.

Tax regime minimums of joint ventures stipulates that royalty can be reduced by up to 15%, and extraction tax also by up to 15%. New contract operating companies allow for royalty to be reduced by up to 20%, and extraction tax by up to 20%.

Economic guarantee for joint ventures stipulates that economic, financial equilibrium factor must be ensured until return on investment is achieved. New contract operating companies allow for contracts to include clauses for restoring economic, financial equilibrium.

Duration and extensions for joint ventures stipulates maximum of 25 years, renewable for a period not exceeding 15 years. New contract operating companies allow for duration established in contract; Republic always retains ownership of deposits.

Reversion of assets for joint ventures stipulates assets must be returned to Republic upon expiration of rights, without compensation. New contract operating companies provide for newly incorporated assets to be transferred to Republic at end of contract at no cost.