U.S. President Donald Trump has addressed Venezuela's oil industry, making claims regarding past asset seizures, proposing a substantial U.S. investment, and implementing policy measures to control Venezuelan oil revenue. These actions follow the apprehension of Venezuelan leader Nicolás Maduro. Oil executives have responded to investment proposals with skepticism, citing Venezuela's past nationalization of assets and current commercial conditions.
Background on Venezuela's Oil Industry and U.S. Claims
Former President Donald Trump stated that the U.S. would "run" Venezuela and "indefinitely" control its oil sales. He asserted that Venezuela "took our oil away from us" and "stole our assets," describing these actions as "the greatest theft in the history of America." President Trump also stated that a U.S. military operation was aimed at recovering assets allegedly stolen from U.S. companies, claiming the unilateral seizure and sale of American oil, assets, and platforms cost billions of dollars.
Venezuela's constitution declares the nation owns all mineral and hydrocarbon deposits within its territory. Experts, including Roxanna Vigil of the Council on Foreign Relations and Samantha Gross of the Brookings Institution, clarified that the assets belonged to private companies, not the U.S. government, and the oil reserves themselves always belonged to Venezuela.
History of Nationalization and Asset Seizures
Venezuela's nationalization process of its oil industry began in 1975 under President Carlos Andrés Pérez, leading to the creation of the state-owned Petróleos de Venezuela S.A. (PDVSA) in 1976. Companies affected by the 1976 nationalization received approximately $1 billion in compensation.
In the 1990s, Venezuela invited foreign companies to return to boost oil production. However, in 2007, the government under President Hugo Chávez mandated that PDVSA take a minimum 60% stake in foreign oil projects. Companies that did not comply, such as U.S.-based Exxon Mobil and ConocoPhillips, withdrew from the country, leading to the expropriation of their assets. Other companies, including U.S.-based Chevron, agreed to these terms and continued operations.
At the time, the U.S. State Department acknowledged Venezuela's right to make such decisions while expressing hope for "fair and just compensation" for the companies. Exxon Mobil and ConocoPhillips pursued international arbitration, resulting in awards of billions of dollars, though the companies claim only a fraction of these amounts has been paid. Venezuela has faced at least 60 arbitration claims since the 2000s, with estimated liabilities ranging from $20 billion to $30 billion. The World Bank ruled Venezuela owed ConocoPhillips $8.7 billion for 2007 asset seizures, while an arbitration panel largely annulled a prior award to Exxon.
U.S. Investment Proposals and Industry Response
President Trump proposed that the oil industry invest at least $100 billion in Venezuela to revitalize its oil industry. He met with oil executives, indicating that firms would deal directly with the U.S. government, not the Venezuelan government, and that his administration would determine which companies could operate. He also stated that a benefit for the United States would be lower energy prices.
Oil industry executives expressed a cautious response to the proposal. Darren Woods, ExxonMobil's chairman and CEO, stated that Venezuela is currently "uninvestable" due to existing legal and commercial frameworks and past asset seizures. He indicated that re-entry would require substantial changes to the historical and current conditions in Venezuela, including durable investment protections and reforms to the country’s hydrocarbons law.
Analysts have cautioned that companies may be hesitant due to significant risks. David Goldwyn, president of Goldwyn Global Strategies, characterized the $100 billion figure as "fantastical," suggesting smaller companies might make investments in the $50 million range. Claudio Galimberti, chief economist at Rystad Energy, estimated that $8 billion to $9 billion in new investments annually would be needed to triple production by 2040, requiring subsidies and political stability. ConocoPhillips CEO Ryan Lance called for a restructuring of Venezuela's debt and its entire energy system.
U.S. Policy Actions and Future Outlook
Following the apprehension of Venezuelan leader Nicolás Maduro and his wife, Cilia Flores, in Caracas by U.S. military forces, President Trump signed an executive order to prevent the seizure of Venezuelan oil revenue held in U.S. Treasury accounts. The order, which declared a national emergency, specified that these funds represent the sovereign property of Venezuela, held in U.S. custody for governmental and diplomatic use, and are therefore not subject to private claims. It further stated that any judicial attempt to seize these funds would "materially harm the national security and foreign policy" of the United States and impede efforts to "ensure economic and political stability in Venezuela." The legal basis cited for this order included the 1977 International Emergency Economic Powers Act and the 1976 National Emergencies Act.
U.S. Secretary of State Marco Rubio stated that the U.S. plans to sell 30-50 million barrels of already produced Venezuelan oil, with the revenue intended to help stabilize Venezuela's economy, while repaying U.S. oil companies is considered a longer-term objective. The White House aims to "selectively" roll back U.S. sanctions on Venezuelan oil sales and coordinate with interim authorities, controlling these sales and depositing funds into U.S.-controlled accounts to maintain leverage.
President Trump also indicated a potential inclination to exclude ExxonMobil from Venezuela's oil investment efforts, citing dissatisfaction with the company's response to his investment initiatives, stating, "I didn’t like Exxon’s response. I’ll probably be inclined to keep Exxon out. I didn’t like their response. They’re playing too cute."
Chevron is currently the sole major American oil firm operating in Venezuela, doing so under a specific license. Companies from other countries, such as Spain's Repsol and Italy's Eni, also maintain operations. Energy experts concur that future investments in Venezuela would require significant improvements in governance, restoration of the rule of law, and an easing of U.S. oil sanctions.
Venezuela possesses the world's largest oil reserves, estimated at over 303 billion barrels, approximately 17% of the global supply. However, chronic underinvestment, government mismanagement, and sanctions have caused crude oil production to decline from over 3 million barrels per day to between 800,000 and 1 million barrels per day.