Nelson Mullins partners Henry Burwell, John Haley, and Jim Reardon answered Offshore Magazine's Q&A article discussing the ongoing situation in Venezuela and what it means in the oil and gas industry. The recent political shifts and investor sentiment are shaping expectations for Venezuela’s hydrocarbon production and broader sector dynamics.  

According to the attorneys, U.S. operators should carefully monitor sanctions developments and negotiate contractual clauses that mitigate regulatory risks while preserving operational flexibility. These measures help ensure that offshore operations can adapt quickly to changes in both U.S. and Venezuelan law. 

The partners advised structuring Venezuelan investments carefully to optimize U.S. tax outcomes. “From a U.S. income and withholding tax law perspective, it would be best to structure Venezuelan investment through an entity that is disregarded or treated as a tax partnership, so that losses and Venezuelan income tax credits flow through to the U.S. shareholder,” they said, noting that this approach helps U.S. operators manage Venezuelan tax exposure effectively. 

Finally, Henry, John, and Jim noted that thoughtful planning around entity structure, foreign tax credits, and partnership rules can help operators mitigate risk while positioning to capitalize on new opportunities in Venezuela’s oil and gas sector. 

You may read the full article here.