Former President Donald Trump has outlined a plan envisioning significant US oil industry operations in Venezuela within 18 months following a leadership transition. The proposal includes substantial capital investment from American companies, with potential reimbursement from the US government or through generated revenue. This initiative comes as experts highlight the extensive financial, logistical, and political challenges associated with revitalizing Venezuela's oil sector, which holds the world's largest proven reserves but has seen a drastic decline in production over decades.
Former President Trump's Proposals for Venezuela
Former President Donald Trump has stated that the US oil industry could commence increased operations in Venezuela within 18 months, following a military operation that would lead to the removal of President Nicolás Maduro from power. Maduro has since been brought to the US to face criminal charges. Trump indicated to NBC News that significant capital investment would be required, which he anticipated US oil companies would provide, with reimbursement facilitated either by the US government or through generated revenue. He previously articulated an ambition for American petroleum companies to expand their operations in the country, asserting that "Having a Venezuela that's an oil producer is good for the United States because it keeps the price of oil down."
Reports indicate Trump's objective is to leverage Venezuela’s crude oil reserves to gain control over a significant portion of the western hemisphere’s oil supply, aiming to reduce global market prices to approximately $50 per barrel from current levels exceeding $56 per barrel. This strategy reportedly includes restricting access for Russia and China to Venezuela and establishing a western hemisphere oil production stronghold. The White House confirmed plans for the US to control Venezuela’s oil sales indefinitely, following the claim of 50 million barrels of blockaded crude, with proceeds intended to “benefit the Venezuelan people.” Trump later stated that Venezuela would use profits from any oil deal with Washington to purchase only US-made products.
Trump also claimed that Venezuela had "unilaterally seized and stole American oil," a statement echoed by Vice President JD Vance.
Venezuela's Oil Industry: Reserves and Production Decline
Venezuela possesses the world's largest proven oil reserves, estimated at 303 billion barrels, primarily consisting of heavy, sour crude located in the Orinoco Oil Belt. This type of crude is dense and viscous, requiring specialized methods like steam injection and diluents for extraction.
Despite these vast reserves, Venezuela's oil production has declined significantly since the late 1990s and early 2000s. Output, which peaked at 3.5 million barrels per day (bpd) in the 1970s and 3 million bpd in the late 1990s, stood at approximately 860,000 bpd in November. This reduction is attributed to several factors:
- Increased state control over the national oil company, PDVSA, after Venezuela nationalized its oil industry in 1976 and further increased state control over foreign-owned assets in 2007 under President Hugo Chávez.
- An outflow of experienced personnel.
- Decades of underinvestment and reported corruption within the state-run industry.
- US sanctions, initially imposed in 2015 under the Obama administration due and later intensified, which restricted investment and access to necessary components and foreign capital.
Expert Assessments and Challenges to Revival
Analysts and industry experts have highlighted numerous challenges and significant investment requirements for restoring Venezuela's oil output:
- Investment Costs: Analysts previously estimated that restoring Venezuela's oil output to previous levels could necessitate tens of billions of dollars and potentially a decade. Rystad Energy estimates that achieving 2 million bpd could require up to $183 billion and extend until 2040, including $53 billion for maintenance and an additional $8-9 billion in annual investment. An initial $30-35 billion would be required in the first two years. Other industry analysts project around $110 billion for restoration.
- Infrastructure: Decades of underinvestment and neglect have severely degraded the country's oil infrastructure, posing a primary hurdle.
- Stability and Legal Framework: Firms would require assurances of governmental and systemic stability before making substantial investments. Legal and political obstacles would need to be addressed, with agreements necessary with any future Venezuelan government. Companies face risks related to the stability of a new administration and concerns about past expropriations.
- Timeframe: Experts suggest that projects would likely take years, if not a decade, to yield results, with some projections extending to 2040 for significant output increases.
- Limited Immediate Market Impact: Analysts project that any proposal for increased Venezuelan output would likely have a limited impact on global oil supply and prices within the next few years due to the extensive timeframe and numerous challenges. Even if Venezuela returned to a peak production of approximately three million barrels per day, it would still not rank among the world's top 10 producers. Global oil markets are not currently experiencing a shortage, with high production from OPEC+ countries.
US Oil Company Engagement and Concerns
Currently, Chevron is the sole major US firm operating in Venezuela, doing so under a special exemption from US sanctions. Chevron spokesman Bill Turenne stated the company "remains focused on the safety and wellbeing of our employees, as well as the integrity of our assets," and continues to operate "in full compliance with all relevant laws and regulations." Exxon and ConocoPhillips have not immediately responded to requests for comment regarding Trump's plans.
US officials have engaged with oil company executives to discuss potential investment programs. However, companies like Chevron, ExxonMobil, and ConocoPhillips are reportedly cautious, conveying to the Financial Times that they would require "serious guarantees" from the Trump administration before making substantial investments to increase Venezuela’s crude output, citing shareholder pressure for strong returns. An energy-focused private equity investor also noted the potential for sudden policy shifts to impact investment decisions. Representatives from major US petroleum companies were scheduled to meet with the Trump administration.
Global Market Context and Refining Suitability
Oil prices are currently declining due to a supply glut, with production exceeding demand. The global market recorded a third consecutive year of annual losses last year, a trend projected to continue through 2026. Prior predictions from Goldman Sachs indicated an average Brent crude price decrease from $69 in 2025 to $56 this year. Increased Venezuelan production could potentially lead to further price reductions, possibly to $54-$58 per barrel.
US refineries are particularly well-suited to process Venezuela's heavy crude. Nearly 70 percent of US refining capacity, especially along the Gulf Coast, was designed to handle heavier crude grades. This infrastructure was built before the recent increase in lighter shale oil production. While Canadian heavy crude has filled some of the gap left by reduced Venezuelan imports, increased Venezuelan exports could displace Canadian crude, potentially offering a lower price to these refineries. Commercial considerations for investors include current declining oil market prices and the break-even price for production in the US Permian basin at approximately $65 per barrel. For Venezuelan crude from the Orinoco region, the break-even price was $49 per barrel in 2020 but is now estimated to be $65-80 due to underinvestment. Investments in Venezuelan oil would need to offer competitive returns compared to other global opportunities.
Claims of Expropriation and Legal Clarification
Regarding claims by Former President Trump and Vice President Vance that Venezuela had "unilaterally seized and stole American oil," energy law experts provided clarification to BBC Verify. They explained that oil discovered within Venezuela is owned by the Venezuelan government. Petroleum companies are granted rights to extract and commercialize this oil through specific license or concession agreements. Venezuela nationalized its oil industry in 1976. In 2007, during the presidency of Hugo Chavez, the government increased state control over remaining foreign-owned assets belonging to US oil firms operating in the country.
Long-Term Demand and Climate Considerations
The long-term outlook for oil demand presents an additional challenge. Climate action, including the expansion of green power generation and the shift to electric vehicles (EVs), could lead to a permanent reduction in global oil demand. Research by Carbon Tracker suggests that efforts to increase Venezuela's crude production risk contributing to a "scramble for stranded assets," as the declining cost of renewables makes heavy crude extraction increasingly less viable. Economists at the International Energy Agency forecast a peak in oil demand around 2030, primarily driven by EV adoption in countries like China and India. If Venezuela's crude production takes until 2040 to significantly increase, investments could be undermined, especially if the green energy transition further lowers oil prices. Experts indicate that any widespread return to fossil fuel exploitation would have negative climate implications. Carbon Tracker's analysis posits that the more significant impact of intervention in Venezuela's oil sector might be indirect, potentially diverting attention from the urgent transition to renewables, reinforcing resource conflict paradigms, and hindering coordinated climate policy.