Energy companies operating in Venezuela will soon be required to generate their own electricity for oil and gas projects — a mandate written directly into draft regulations for the country’s new oil law. The rules, circulated in mid-May and reviewed by Bloomberg, call for companies to go entirely off-grid rather than draw from Venezuela’s strained national power system. Private firms may also be permitted to sell electricity directly to oil developers under the proposal.
The requirement applies to foreign operators including Chevron, which has significant production in Venezuela’s Orinoco Belt.
Venezuela mandates off-grid power for oil and gas operators
The draft regulations represent a clear break from how energy companies have historically operated in Venezuela. Operators once drew power directly from the national grid without question. Now the rules demand full self-sufficiency across oil and gas areas, and private companies may also be permitted to supply power directly to oil developers under the same framework — creating a potential secondary market for energy services within the sector.
The shift isn’t merely procedural. It signals that Venezuelan authorities recognize the national grid can no longer serve as a reliable backbone for expanded oil activity.
Decades of underinvestment have left Venezuela’s grid unable to support oil expansion
Venezuela’s electricity system relies heavily on hydroelectric generation, with thermoelectric plants burning fuel oil and natural gas as a secondary source. Both have deteriorated badly. Decades of corruption, underinvestment, and deferred maintenance have shut down projects and degraded infrastructure throughout the system — leaving little margin for recovery.
The numbers tell a stark story. According to Miguel Lara, an energy adviser to foreign firms who led Venezuela’s power planning agency from 1999 to 2004, hydro plants are operating at roughly 60% of capacity while thermoelectric plants run at just 20% of their potential. The combined shortfall leaves the country facing a structural power deficit of between 2,000 and 3,000 megawatts — a gap that cannot be closed quickly.
Daily outages disrupt oil production and affect major operators such as Chevron
The consequences for oil production are direct and measurable. Electric motors powering oil wells are sensitive to fluctuations in grid frequency, and when variations are detected, the motors shut down automatically, halting production until the well is restarted — either by automated systems or manually by workers. Every restart means lost time and lost output.
A major outage on April 23 illustrates the scale of the problem. The failure affected all 827 of Chevron’s wells in the Orinoco Belt, causing a measurable drop in production. More than 95% of Chevron’s Orinoco wells depend on the national grid; fewer than 5% run on generators. Lara reported 35 outages between January and April, and three people with knowledge of the situation told Bloomberg that failures occur on a daily basis in Venezuela’s oil and gas fields.
“Every time one of those major power failures occurs — the kind where everyone’s refrigerator starts to suffer and our computers crash — just imagine what that does to the oil wells,” said Chevron spokeswoman Susana Brugada at a May 21 meeting with humanitarian groups, broadcast by Venezuelan network Televen.
Regulatory shift comes as Venezuela courts foreign investors following political changes
The new regulations arrive at a moment of significant political and economic transition. The Trump administration forcibly removed former president Nicolás Maduro in early January and subsequently loosened sanctions on Venezuela, triggering a rush of investors traveling to Caracas to secure contracts and raising expectations of a meaningful expansion in oil activity.
A new administration led by Delcy Rodríguez, previously Maduro’s second-in-command, took office alongside a new oil law. Political change and eased sanctions generated real optimism about Venezuela’s energy potential. Experts, though, caution that enthusiasm must be measured against infrastructure realities.
Lara was direct: any expansion of oil-related activity depends on self-generation covering the increased demand. Diverting grid power to oil operations would require cutting electricity to the general public — a scenario he described as not viable. Some localized upgrades are underway, including efforts by the state-led joint venture Petrozamora to help PDVSA upgrade the San Timoteo gas-powered plant in the Lake Maracaibo region, though those efforts remain limited in scope.
Key takeaways
Venezuela’s new draft oil regulations require energy companies to generate their own electricity for oil and gas operations, rather than rely on a national grid running at a fraction of its potential capacity. The country faces a structural power shortfall of 2,000 to 3,000 megawatts, with hydro plants at 60% capacity and thermoelectric plants at just 20%. Daily outages already disrupt production at major operators including Chevron. The regulatory change reflects both the severity of Venezuela’s grid crisis and the government’s effort to attract foreign investment without further straining public electricity supply.
Carlos is an engineer with strong expertise in technical and industrial topics. He previously worked at international companies such as Siemens and speaks Spanish, German, English, and Italian.
