The January 29 Convergence: GL 46 and Venezuela's Hydrocarbon Reform
On January 29, 2026, two simultaneous legal developments fundamentally restructured Venezuela's energy sector: OFAC issued General License 46, and the Venezuelan National Assembly approved a sweeping reform to the Organic Law on Hydrocarbons.
Understanding how these two instruments interact is essential for anyone evaluating opportunities in the Venezuelan energy sector. Together, they represent the most significant change to the legal framework since the 2001 Hydrocarbons Law.
The most significant changes for foreign investors:
1. Dismantling the State Monopoly
The reform ends the rigid state monopoly established in 1975 and reinforced in 2001. Private companies can conduct exploration and extraction directly, replacing the mandatory state-majority Empresa Mixta structure.
2. Commercialization & Arbitration
• Direct Commercialization: Private operators can market and export crude directly, ending the state's commercial monopoly (if they can demonstrate better pricing than state-owned entities).
• International Arbitration: The reform explicitly authorizes international arbitration, overturning the previous requirement that disputes be resolved exclusively in Venezuelan courts.
• Fiscal Regime: Royalties of up to 30% of production; and the extraction tax is replaced with a new up to 15% levy on gross monthly revenues (payable annually). The Government (executive power) can lower these rates and the income tax rate without the need for a formal law passed by the National Assembly.
3. GL 46's Restrictions
The Venezuelan law opens the door, but GL 46 controls who enters:
• Eligibility: Limited to U.S. entities organized before January 29, 2025.
• Payment Controls: All payments to blocked persons (GoV/PDVSA) must go into Foreign Government Deposit Funds (E.O. 14373), not standard commercial accounts.
• U.S. Law Required: Contracts must specify U.S. law as governing law, with dispute resolution in the United States.
• Prohibited Partners: No involvement by entities tied to China, Russia, Iran, North Korea, or Cuba. This creates substantial due diligence requirements for any joint venture or supply chain arrangement.
The Reality:
This is no longer a sanctions prohibition regime; it's a highly regulated permission structure.
The gap between what the law says and how it operates in practice, and whether the political situation stabilizes enough to provide genuine legal certainty, will determine the success or failure of new entrants in 2026.
Important Note: The law approved by the National Assembly has not been published on the Assembly's website, and it requires promulgation and publication in the Official Gazette. The final published text may differ from what has been reported.
Ramón Andrade is a Partner at Ponte Andrade Casanova (PAC) in Caracas, where he leads the firm's energy, natural resources, and project finance practice.