Let's Talk About Sovereignty: The 1992 Oil Opening

Published at: 11/09/2026 05:00 PM

In 1992, Venezuela was suffering the consequences of the external debt crisis of the 80s, going through Black Friday and a fiscal collapse due to a deep state financial crisis and, because of this, the need to change the commercial strategy of the national oil industry to expand its international production capacity was raised.

This process formally began to be designed and executed between 1992 and 1993, during the second administration of Carlos Andrés Pérez and under the management of Gustavo Roosen in Petroleum of Venezuela S.A. (PDVSA), with the objective of boosting the investment of domestic and foreign private capital in the hydrocarbons industry after the nationalization of 1976.

The Misión Verdad portal conducted research that compared the recent binational energy agreement between Venezuela and the United States, described as “a controlled strategic alliance with a guaranteed fiscal floor”, very different from the Oil Opening of the 90s, which was considered as a scheme of subordination and devaluation of national resources. While the current agreement establishes a strict period of 25 years and investments aimed at stabilizing production, the nineties model is remembered as an illegal delivery of deposits to transnational corporations.

In that investigation, Misión Verdad raised, with respect to the contrast between these agreements, a marked difference in terms of profits and fiscal costs between the oil opening model of the 1990s and the Binational Oil Agreement, and described the agreement of the 90s as a surrender that robbed the State of their revenues; contrary to the rules provided for in the current one, which offers a much more advantageous tax formula for the country.

To learn more about this agreement, we reviewed the interview given by businessman and oil expert Alejandro Terán, who proposed 5 vertices of analysis, which allowed us to establish a comparison of the costs and profits that our country had with the 1992 Oil Opening and this new oil contract:

Royalties, the maximum 1% versus the minimum 16% . The heaviest cost of the Fourth Republic's Oil Opening was the fact that transnational corporations paid a symbolic 1% royalty as a ceiling, on the premise that the extra heavy oil from the Orinoco was “bitumen” and not oil. In contrast, the 2026 agreement is governed by the provisions of the Organic Hydrocarbons Act (LOH), requiring North American operators to tax at least 16% of royalties, thus protecting the sovereignty of natural resources.

Opportunity Cost and Net Profit per Barrel: The mathematical weighting established in the current business makes a net estimate of 19 dollars per barrel, taking 65 dollars per barrel as an international reference price; with a tax regime of 32% of Income Tax (ISLR) plus royalties, it guarantees that Venezuela is left with 19 dollars of net profit for each barrel marketed in the 17 assigned fields. This reverses the logic of the Oil Opening, where most of the profits remained in the hands of foreign corporations and no minimum tax rate was charged to attract foreign investment.

The Origin of Investments and the National Budget : The Oil Opening subordinated the country's real economy to foreign capital at the expense of internal stability . On the contrary, the current business is presented as an association relevant to investment needs, in which the initial injection of 100 billion dollars required to boost production is the exclusive responsibility of the private sector, allowing the Venezuelan treasury to receive clean profits without compromising public funds that the State does not currently have, due to the financial and oil blockade that the country has maintained for 14 years.

Total Projected Tax Revenue : This area was historically described by economic experts as the main reason for massive losses and the looting of national income, due to the zero or low rates agreed upon in the collection of income taxes. On the contrary, in this current negotiation, a tax revenue of 209 billion dollars is estimated over the 25 years that the agreement lasts.

Investment and Reactivation Costs : In 1992, the State assumed the indirect costs to attract capital, and at this time, there is no investment or zero cost for the Venezuelan State, raising more than 100 billion dollars in 100% private investment.

Given this, the financial axes analyzed show that the oil agreement of 2026 represents a structural break with the business model of the 90s, evaluated as a period of high fiscal costs and loss of sovereignty for the country; which transforms Venezuela's relationship with foreign capital from a scheme of subordination to one of mutual national benefit, where the latter is projected as a financial victory based on three major benefits: Maximization of tax collection, Capital injection without public indebtedness and Long-term sustainability.

This is why, from a financial and sovereign point of view, the binational oil agreement demonstrates that it is possible to attract private capital to reactivate the energy industry without the need to finish off the resource or sacrifice the Republic's fiscal rights.

AMELYREN BASABE/Mazo News Team