During Baker Botts' 39th Annual Environmental, Safety & Incident Response Seminar on January 28, 2026, Partner George Fibbe led the lunch session with Francisco Monaldi, Fellow in Latin American Energy Policy at the Baker Institute, on the “Energy & Environmental Implications of Recent Events in Venezuela.”

Key Takeaways

1. Energy upside is significant, but near-term progress depends on who is already in country. Venezuela holds enormous hydrocarbon potential, with vast reserves and many mature fields supported by existing infrastructure. In the short term, however, growth is most likely to come from companies that already have an operating foothold. Incremental production increases are plausible over the next couple of years, while larger scale expansion depends on broader political and economic stability.
    
2. Legal reforms help incumbents but may not unlock major new investment. Proposed changes to the hydrocarbon framework appear to legitimize and stabilize the position of current operators and may expand export flexibility. At the same time, key terms such as royalties and fiscal conditions remain highly discretionary, leaving investors exposed to future shifts. Without clearer protections, the reforms may improve operations for existing players but fall short of creating the certainty needed for large scale new capital deployment.
    
3. Environmental and infrastructure liabilities are major unresolved risks. Many state run fields are in poor technical and environmental condition, with legacy contamination, methane leaks, flaring, and under-maintained facilities. Responsibility for cleanup and environmental liability remains unclear, complicating potential transactions and new investment. Broader infrastructure challenges, including an unreliable electric grid and deteriorated transmission systems, add another layer of operational risk for energy projects.
    
4. Geopolitics, debt, and property rights shape the long-term outlook. The government faces enormous outstanding debt and arbitration claims, and there is little clarity on how legacy obligations to energy companies and service providers will be addressed. At the same time, the presence of other geopolitical actors in key assets, ongoing sanctions dynamics, and questions about political legitimacy and property rights create a complex investment environment. Progress in stabilizing exports and curbing illicit trade is notable, but long-term investment confidence will hinge on clearer rules, recognized governance, and a credible transition path.

Venezuela’s energy sector presents a striking contrast between geological promise and above ground uncertainty. On paper, the scale of hydrocarbon reserves and existing infrastructure offers one of the largest redevelopment opportunities in the world, particularly in mature fields where incremental investment could quickly raise production. In practice, near-term gains are likely to be led by companies that already have experience operating locally, while broader participation will depend on whether the legal and political environment becomes more predictable.

Legal reforms aimed at modernizing the hydrocarbon framework are an important step, especially in clarifying the position of current operators and potentially expanding export flexibility. Yet significant investor concerns remain. Environmental liabilities at aging state operated fields, unclear responsibility for remediation, chronic gas flaring, and weak supporting infrastructure all represent material risks. Layered on top are unresolved sovereign debts, arbitration claims, sanctions exposure, and questions about property rights and political legitimacy. For companies evaluating opportunities, the path forward requires careful structuring, robust risk allocation, and close attention to both regulatory change and geopolitical developments that will shape whether this vast resource base can translate into durable, investable projects.