After removing Venezuelan President Nicolás Maduro over the weekend, U.S. President Donald Trump expressed confidence that American oil companies would enter Venezuela, invest billions, and generate significant profits for both themselves and the Venezuelan people. He emphasized the intention to “take back the oil,” which he believed should have been done earlier.
Venezuela possesses the largest proven oil reserves globally, but the issue of who has the rights to extract and benefit from them remains a contentious issue with complex implications. The country nationalized its oil sector many years ago and in 2007, it seized most U.S. oil assets, leading to the expulsion of two out of three American companies.
Ongoing legal battles persist over the substantial amounts that these companies claim Venezuela owes them in compensation, creating uncertainty around the timeline and conditions under which they might consider re-entering the market.
The ascension of Hugo Chavez as Venezuela’s president in 1999 marked the beginning of a shift to reduce U.S. influence in the country. At that time, despite being a major oil producer, a significant portion of Venezuela’s oil was under the control of three American companies: ConocoPhillips, ExxonMobil, and Chevron.
Chavez escalated the nationalization of the oil industry in 2007, compelling both U.S. and other international companies to cede operational control to the state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), effectively seizing the majority of their assets. Following this, Venezuela assumed ownership of up to 83% of the projects concentrated in the Orinoco River Basin, a highly lucrative and extensively explored oil region globally.
While Chevron maintained its operations, ConocoPhillips and ExxonMobil failed to reach agreements with the Venezuelan government and subsequently exited the country. Despite facing stringent U.S. sanctions, Chevron retained permission to extract and export oil under a special license.
The seizure of private assets initiated a protracted battle for compensation that continues to date. ExxonMobil claimed $10 billion in damages and pursued its case at the International Centre for Settlement of Investment Disputes (ICSID), resulting in a $1.6 billion ruling against Venezuela. ConocoPhillips also secured an $8.5 billion award from the ICSID, with Venezuela’s appeal being dismissed in January 2025.
Estimates suggest that Venezuela has been ordered to pay approximately $60 billion in various claims by international courts. However, the country has yet to fulfill these obligations, keeping the compensation disputes unresolved.
President Trump’s recent announcement hinted at a straightforward re-entry of oil companies into Venezuela, envisioning a restoration of the industry akin to its prime in the early 2000s. Nonetheless, reviving Venezuela’s deteriorated oil infrastructure, exacerbated by previous administrations and sanctions, may necessitate over $100 billion and a decade for comprehensive restoration.
The decision for U.S. companies to reinvest in Venezuela will hinge on the perceived viability of such ventures. Chevron, presently employing 3,000 workers in Venezuela, prioritizes their safety while refraining from discussing expansion plans. ConocoPhillips refrains from speculating on future investments given past expropriations, emphasizing the uncertainties surrounding operating in Venezuela.
The altered circumstances underscore the U.S.’s proclaimed dominance over Venezuela, with officials like Stephen Miller emphasizing the imposition of a complete embargo on Venezuelan oil trade, positioning the U.S. as the arbiter of commerce in the region. Secretary of State Marco Rubio reinforced this stance, asserting that adversaries of the U.S., including China, will be excluded from Venezuela’s oil sector despite China’s significant oil trade with the country.